Oil prices drop on increased U.S. drilling activity
Oil prices fell on Monday, pulled down as the latest rise in the U.S. rig count pointed to a further increase in American production, potentially undermining efforts led by OPEC to tighten markets.
U.S. West Texas Intermediate (WTI) crude futures were at $57.05 a barrel at 0219 GMT, down 31 cents, or 0.5 percent, from their last settlement.
Brent crude futures, the international benchmark for oil prices, were down 34 cents, or 0.5 percent, at $63.06 a barrel.
"The largest concern for investors currently remains the rise in the U.S. rig count, which could potentially jeopardise the OPEC and Russian agreement when they meet for a review in June, 2018," said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.
The amount of rigs drilling for new oil production in the United States rose by two in the week to Dec.8, to 751, the highest level since September, General Electric Co`s Baker Hughes energy services firm said on Friday.
A higher rig count points to a further rise in U.S. crude production, which has already increased by more than 15 percent since mid-2016 to 9.71 million barrels per day (bpd).
That`s the highest level since the early 1970s, and close to levels from top producers Russia and Saudi Arabia.
Rising U.S. output threatens to undermine efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC producers, most importantly Russia, to support prices by withholding supplies.
OPEC and its allies started withholding supplies last January and currently plan to continue doing so throughout 2018.