Oil declined after rallying almost 10% over the past two weeks, with technical indicators suggesting recent gains may have been overdone.
West Texas Intermediate fell to around $87 a barrel after a 2.3% advance last week. Technical gauges including the relative strength index suggest futures remain overbought. Oil has surged by almost $20 a barrel since mid-June on production cuts from Saudi Arabia and Russia, which have now been extended through the end of the year.
“Indicators are signaling overbought conditions,” said Han Zhong Liang, investment strategist at Standard Chartered Plc in Singapore, pointing to the RSI, stochastic oscillators and Bollinger bands. “Put together, we believe a consolidation is likely.”
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