Oil prices fall as relief over falling United States rig count fades

Oil Gains as US Jobs Fan Optimism and Drop in Rigs Eases Fears

Oil prices fall as relief over falling US rig count fades

Oil prices fell on Monday on expectations that US output will rise this year, erasing earlier gains buoyed by lower weekly USA rig counts and falling US unemployment.

Brent crude oil could slide below $60/bbl as a surge in US shipments to Asia threatens to undermine the production cut deal between OPEC and its allies, according to ING analysts, in contrast to bullish views from Goldman Sachs and others who see prices supported as strong demand soaks up supply from the U.S. West Texas Intermediate, the US benchmark for the price of oil, was down 0.6 percent to $61.67 per barrel.

Brent crude futures slipped 54 cents, or 0.8 per cent, to settle at US$64.95 per barrel.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $62.10 a barrel at 0407 GMT, up 6 cents, or 0.1 percent.

"Rising production and inventory in the U.S. has been reducing fund sentiment since it peaked at the end of January", ING said.

Oil markets gained yesterday on the back of a drop in the number of U.S. rigs drilling for more production and as the United States economy continued to create jobs, which industry hopes will drive higher fuel demand.

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According to energy services firm Baker Hughes, U.S. energy companies last week cut oil rigs for the first time in nearly two months, with drillers cutting back four rigs, to 796.

Despite the lower rig count, an early indicator of future output, activity remains much higher than a year ago.

Hours before late Tuesday's American Petroleum Institute's and Wednesday's U.S. Energy Information Administration's weekly inventories report, traders are eying a surge in U.S. production that could push inventories in the U.S. higher. Only Russia pumps more, at almost 11 million bpd.

Broader markets were roiled by U.S. President Donald Trump's decision to go ahead with tariffs in imported steel and aluminum, sparking fears of a trade war.

On Sunday, Iranian oil minister Bijan Zanganeh said Opec could agree in June to begin easing current production curbs in 2019, the Wall Street Journal reported.

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