Oil falls as uncertainty of OPEC-led cut extension
Oil prices fell on Monday, pulled down by rising U.S. drilling activity and by doubts whether an OPEC-led production cut initially due to end in mid-2017 would be extended.
Benchmark Brent crude futures LCOc1 fell by 37 cents from their last close to $50.43 per barrel by 0626 GMT.
In the United States, West Texas Intermediate (WTI) crude futures CLc1 were down 45 cents at $47.52 a barrel.
Traders said that prices were pulled down by rising U.S. drilling and production as well as over uncertainty whether the Organization of the Petroleum Exporting Countries (OPEC) and other producers who met in Kuwait over the weekend, would extend output cuts beyond the middle of the year.
Traders said that rising U.S. drilling activity and oil production were contributing to financial traders reducing their long positions in crude futures to the lowest level since early December.
Since mid-2016, U.S. oil production has risen by 700,000 barrels per day (bpd) to 9.13 million bpd, government data shows C-OUT-T-EIA.
U.S. bank Goldman Sachs said that should the rig count stay at current levels and the impact of previously closed rigs returning to production was considered, then U.S. oil production would rise by 235,000 bpd between the fourth quarter of 2016 and the first half of 2017.
Because of soaring U.S. output and the cuts by OPEC the discount of U.S. WTI crude prices to international Brent crude CL-LCO1=R has grown to around $2.90 per barrel, heading for its widest close since late 2015, encouraging more sales of U.S. oil to Asia to replace cuts in Middle East production.
Despite the ongoing fuel supply overhang and rising U.S. shale output, Goldman Sachs said that global oil markets were slowly rebalancing, largely due to strong demand growth.
(Reporting by Henning Gloystein; Editing by Richard Pullin and Kenneth Maxwell)