Oil prices fall on oversupply worries as US rig count rises

Stacked rigs are seen along with other idled oil drilling equipment at a depot in Dickinson, North Dakota.
Stacked rigs are seen along with other idled oil drilling equipment at a depot in Dickinson, North Dakota.PHOTO: REUTERS

SINGAPORE (REUTERS) - Oil prices slipped lower in early Asian trade on Monday after closing the previous session at their lowest level since March on renewed oversupply concerns after data showed US drilling activity increased last week.

US oil producers added 21 oil rigs last week, the biggest rise since April 2014, oil services company Baker Hughes said in on Friday.

That was despite a 21 per cent collapse in US crude prices since mid-June when prices hit US$61 a barrel on June 23 leading U.S. oil prices to enter a bear market. A 20 per cent downturn is considered by many traders to constitute a bear market.

US crude for September delivery was down 14 cents at US$48 as of 0024 GMT, after closing the previous session down 31 cents at US$48.14, its lowest settlement since March 31 and down 5.5 percent on the week.

Brent crude futures for September delivery fell 4 cents to US$54.58 after ending the previous session 65 cents down, the lowest close since March 19 and a drop of 4.3 per cent for the week.

Hedge funds and other money managers slashed long bets on US crude futures and options to the lowest level in five years last week, as crude continued to tumble, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Crude oil exports from Iraq's south are on course for a new monthly record this month having risen above 3 million barrels per day (bpd) so far this month, loading data and an industry source said on Friday.

Market dynamics are changing in Opec countries, with an increasing focus on earning diversification to protect state revenues in a low crude oil price environment," ANZ said in a report on Monday.

"Saudi Basic Industries Corp is looking at investing in U.S. shale and some other options in China using coal to convert to chemical products. The potential also exists for the Middle East to become a larger refined product export hub," the ANZ note added.

Iranian refining and petrochemical firms could be partially sold off as part of a package of measures to attract foreign investors once western sanctions officially end, Minister of Industry, Mines and Trade Mohammad Reza Nematzadeh said at a conference last week.

The state-owned Nigerian National Petroleum Corporation (NNPC) will be soon be split into two entities - an independent regulator and investment vehicle, a spokesman for Nigerian President Muhammadu Buhari said on Saturday.