Oil prices dip on drilling data

[NEW YORK] Oil prices dipped on Monday as worries about oversupply returned to the forefront with US data suggesting petroleum drilling is picking up in some areas.

US benchmark West Texas Intermediate for June delivery slipped 14 cents to finish at US$59.25 a barrel on the New York Mercantile Exchange.

European benchmark Brent oil for delivery in June fell 48 cents to US$64.91 a barrel in London.

Commerzbank said surging oil prices had "noticeably slowed" the trend of oil companies cutting back on rigs due to a supply glut.

The US oil rig count fell by just 11 last week, the smallest decline since early April, and came as some key petroleum basins saw the first rise in the weekly rig count all year, the bank said in a note.

"It is therefore questionable whether the current oil price level can be maintained," Commerzbank said.

"After all, by betting that US oil production will fall, many speculators have played a major part in driving oil prices up by 50 per cent in the past four months." Tim Evans, analyst at Citi Futures, said lofty supplies of crude offset news of additional Chinese monetary stimulus and a decision by the Saudi king to skip a summit with President Barack Obama this week.

"In terms of the larger fundamental picture, however, we continue to see supply outpacing demand, with the resulting increase in inventories maintaining downward fundamental pressure on prices," Mr Evans said.

AFP