Crude Oil Falls for Second Day as U.S. Rig Count Rises
Crude oil slid
for a second session on Monday, falling further from last week's 2016
highs on concerns over a supply glut after the U.S rig count rose for
the first time since December.
U.S.
energy firms last week added one oil rig after 12 weeks of cuts,
according to data by industry firm Baker Hughes. The addition, coming
after oil rigs had fallen by two-thirds over the past year to 2009 lows,
showed the fall in crude drilling stabilizing after a 50-percent price
rally since February. [RIG/U]
U.S.
crude CLc1 dropped 55 cents, or 1.4 percent, to $38.89 a barrel by 0156
GMT. The market on Friday climbed to $41.20 a barrel, its highest since
early December, before losing ground to settle down nearly 2 percent at
$39.44.
Brent crude's front-month contract LCOc1 was down 33 cents at $40.87. It hit a high of $42.54 a barrel in the last session.
"The
rebound in crude oil prices in the last month appears to have
stabilized the number of rigs at work in the U.S. shale sector," ANZ
said in a note to clients.
"After falling for six consecutive months, Baker Hughes data showed U.S. oil rig counts increased by one to 387."
Global
oversupply in oil had knocked crude prices down from mid-2014 highs
above $100 a barrel to 12-year lows earlier this year, taking Brent to
around $27 and U.S. crude to about $26.
The
combination of declining oil output, smaller crude stockpile builds and
surging gasoline consumption in the United States helped the recovery.
Prices have also
rallied over the last two months after the Organization of the Petroleum
Exporting Countries (OPEC) floated the idea of a production freeze at
January's levels.
But the market is looking for more news on this step.
"Markets
want to see a little more back up as to what is happening there," said
Jonathan Barratt, chief investment officer at Ayers Alliance Securities
in Sydney.
"The fact is we haven't heard anything after that ... but really it is Monday trading, maybe it will come up little bit later."
The
average price of a gallon of gasoline in the United States gained
nearly 25 cents in the past four weeks, according to a survey released
on Sunday.
Money managers raised bullish bets on U.S. crude to a five-month high, data showed on Friday.
(Reporting by Naveen Thukral; Editing by Richard Pullin and Joseph Radford)