Oil near a two-month low as US drillers ramp up operations

[TOKYO] Oil traded near the lowest close in two months as US oil producers continued to revive drilling in the shale patch, adding rigs for the fourth consecutive week in the longest streak of increases since August.

Futures fell as much as 0.4 per cent in New York after dropping 1.3 per cent on Friday. Rigs targeting oil in the US rose by 14 to 371 last week, after 27 had already been added since the start of the month, Baker Hughes said on its website on July 22. US crude and gasoline supplies are at the highest seasonal levels in at least two decades, government data show.

Oil retreated in recent weeks as a rally spurred by supply disruptions in Nigeria and Canada and falling US output lost momentum. Prices remain up about 68 per cent from a 12-year low in February, a recovery that has prompted American producers to begin returning drilling rigs to service.

West Texas Intermediate for September delivery fell as much 16 cents to US$44.03 a barrel on the New York Mercantile Exchange and was at US$44.07 as of 7.23am Tokyo time. The contract fell 56 cents to US$44.19 a barrel on Friday, its lowest close since May 9. Total volume traded was about 83 per cent below the 100-day average.

Brent for September settlement dropped as much as 0.3 per cent to US$45.56 a barrel on the London-based ICE Futures Europe exchange. The contract fell 1.1 per cent on Friday.

BLOOMBERG