LONDON: Oil prices fell on Monday, with U.S. crude falling close to a nearly six-year low, as Saudi Arabia's new King Salman moved to assuage fears of an unstable transition and any policy change in the world's largest oil exporter.
Salman was quick to retain veteran Saudi oil minister Ali al-Naimi on Friday, in a message aimed at calming a jittery energy market following the death of King Abdullah last week.
March Brent crude was trading down 63 cents at $48.16 per barrel by 1106 GMT, wiping out modest gains made on Friday but off an early low of $47.57.
West Texas Intermediate (WTI) crude for March delivery was at $45.10 a barrel, down 49 cents. Front-month WTI touched an intraday low of $44.35, just above the $44.20 hit on Jan. 13, which was its lowest level since April 2009.
Saudi Arabia, the world's top oil exporter, led the 12-member Organization of the Petroleum Exporting Countries (OPEC) last November in a decision to keep oil production steady at 30 million barrels per day. This has added to a global supply glut that has more than halved prices since June.
"Oil markets will take comfort from the speed and stability of the succession process, and the announced pledge for continuity of policy," said Majid Jafar, chief executive of Crescent Petroleum, a UAE-headquartered oil and gas producer focussed on the Middle East.
In Greece, the left-wing Syriza won a decisive victory against the ruling conservatives in Sunday's election, setting up a possible confrontation with international creditors.
Brent's premium to WTI <CL-LCO1=R> saw an intraday high of $3.59, its highest since January 5, after U.S. crude stockpiles rose by the highest amount in over two decades.
Money managers cut their net long U.S. crude futures and options positions in the week to Jan. 20, the U.S. Commodity Futures Trading Commission said on Friday.
Oil services firm Baker Hughes published data on Friday that showed the number of U.S. oil rigs fell for a seventh straight week to 1,317, the fewest since January 2013.
Germany-based Commerzbank said that output would remain high in the short term but U.S. oil rigs would continue to dwindle in the coming weeks, eventually supporting prices.
"It is only a question of time before this is reflected in decreased oil production," Commerzbank analysts said in a note to clients on Monday.
"In our opinion, this indicates that prices will recover in the second half of the year."
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