Oil starts the week lower as markets focus on U.S. drilling activity

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Investing.com - Oil prices declined during European morning hours on Monday, starting the week off on negative footing as prospects of rising U.S. production weighed on the market.

Crude oil for March delivery on the New York Mercantile Exchange shed 27 cents, or about 0.5%, to $52.90 a barrel by 3:50AM ET (08:50GMT).

Elsewhere, Brent oil for April delivery on the ICE Futures Exchange in London declined 41 cents, or around 0.7%, to $55.30 a barrel.

Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. increased by 15 last week, the 12th gain in 13 weeks.

That brought the total count to 566, the most since November 2015.

The data raised concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.

Futures have been trading in a narrow range around the low-to-mid $50s over the past month as sentiment in oil markets has been torn between expectations of a rebound in U.S. shale production and hopes that oversupply may be curbed by output cuts announced by major global producers.

OPEC and non-OPEC countries have made a strong start to lowering their oil output under the first such pact in more than a decade as global producers look to reduce oversupply and support prices.

January 1 marked the official start of the deal agreed by OPEC and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day to 32.5 million for the next six months.

The deal, if carried out as planned, should reduce global supply by about 2%.

Uncertainty over the outlook for U.S policy also broadly weighed on financial markets after President Donald Trump introduced immigration curbs that sparked criticism at home and abroad.

Elsewhere on Nymex, gasoline futures for March ticked up 0.9 cents, or 0.6% to $1.533 a gallon, while March heating oil dipped 0.9 cents, or 0.6%, to $1.624 a gallon.

Natural gas futures for March delivery slumped 4.8 cents, or 1.4%, to $3.310 per million British thermal units.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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