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Oil prices drop on increased US rig drilling
[SINGAPORE] Oil prices fell on Monday, pulled down as the latest rise in the US rig count pointed to a further increase in American production, potentially undermining efforts led by Opec to tighten markets.
US West Texas Intermediate (WTI) crude futures were at US$57.10 a barrel at 0019 GMT, down 25 cents, or 0.4 per cent, from their last settlement.
Brent crude futures, the international benchmark for oil prices, were down 32 cents, or 0.5 per cent, at US$63.08 a barrel.
"The largest concern for investors currently remains the rise in the US 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 US crude production, which has already increased by more than 15 per cent 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 US 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.