Oil: July set to log biggest monthly gain of the year,

Oil prices struggled for direction in Monday’s trade, with investors likely booking some profits after a solid run higher that has put the U.S. contract on track for its biggest monthly rise of the year. As Market Watch writes in the article Oil retreats, but July set to log biggest monthly gain of the year, on the New York Mercantile Exchange, West Texas Intermediate crude for delivery in September traded 4 cents, or 0.1% lower, at $49.67 a barrel, while September Brent crude was down 2 cents at  $52.50 a barrel.

Both contracts had traded with firm gains earlier in the session, with WTI briefly topping $50 a barrel. The early Monday rally came on speculation the U.S. is considering stepping up sanctions against OPEC member Venezuela — a major exporter of oil to the U.S. — after a referendum over the weekend.

“This could result in a shortage of heavy oil for U.S. refineries given that Saudi Arabia is already shipping less oil to the U.S. Ultimately, however, all these factors led to an increase in speculative positions on rising oil prices,” analysts at Commerzbank said in a Monday note.

The Sunday vote will give President Nicolás Maduro’s government overwhelming powers to redraft the country’s constitution, but oppositions are disputing the vote count. Ten people have died in clashes between protesters and state security forces in the aftermath of the referendum.

However, the weakness for oil in Monday’s session is “nothing unusual,” said Samir Madani, co-founder of TankerTrackers.com and initiator of the #OOTT hashtag. “Just some Monday morning profit-taking after a strong week,” he said. “[But] it will bounce again.”

Crude oil last week logged a weekly gain of 8.6%, its biggest weekly jump since early December, as prices got a lift from renewed production-curb commitments from OPEC members as well as the uncertainty in Venezuela ahead of the weekend vote.

The sharp gains in recent weeks have put WTI on track for its biggest monthly jump since December, up 8% in July on the last trading of the month.

“Fundamentals continue to suggest a more-balanced crude-oil market,” said ANZ. The bank also noted the front end of the oil-market curve has shifted into backwardation — when prices for nearby delivery are higher than those in the future. That’s a sign that immediate demand is healthy and the market is tightening.

The ongoing pullback in U.S. oil supplies and drilling activity has also beefed up views that the shale boom, the main culprit of the soft oil prices of the past three years, is plateauing. According to oilfield-service giant Baker Hughes, the number of active oil rigs in the U.S. rose by two last week after a decline of one in the previous week. Meanwhile, government data show U.S. oil inventories have dropped nearly 10% since their latest record high in March. In other energy products on Monday, August gasoline rose 0.9% to $1.69 a gallon and August gasoil jumped 1.2% to $490.75 per metric ton. September natural gas  fell 2.4% to $2.87 per million British thermal units.