Crude oil is trading lower on Monday as concerns over the increasing U.S. oil output offset OPEC’s effort on production reduction. West Texas Intermediate for April delivery fell 0.74 percent to $48.42 a barrel at 12:08 p.m. on the New York Mercantile Exchange. While Brent Crude for May is trading at $51.78 a barrel on the London-based ICE Futures Europe exchange.
U.S. drillers boosted the rig count for a 9 straight week by 14 to 631 last week, data from Baker Hughes showed on Friday. This is the highest level since September, 2015. They have added 106 oil-rig count this year.
“Speculative investors have thrown in the towel, it seems. We’ve got record selling in the week ending March 14 and the bleeding has not stopped yet,” said Carsten Fritsch, senior commodities analyst at Commerzbank in Frankfurt, CNBC reported.
The increasing U.S. oil production continued to weigh on OPEC’s effort to rebalance the oil market.On November, 2016, OPEC and non-OPEC oil producers agreed to cut production of 1.8 million barrels per day.
“The risks that OPEC has painted itself into a corner cannot be ignored and it may need to extend, or even increase, cuts if the response from shale producers is more vigorous than we currently model,” J.P. Morgan said in a report, Reuters reported.