Oil slid lower on Monday in European trade with the US benchmark dropping further below the $50-level amid symptoms of an increased domestic drilling activity in the US.
On the New York Mercantile Exchange, crude oil for July delivery retreated to an intraday low of $48.21 a barrel, the weakest since June 2. It last perched at $48.56 by 07:50 GMT, down 51 cents or 1.04%.
New York-traded oil prices dipped $1.49 or 2.95% before the weekend, after data revealed the US oil rig count climbed the second straight week the previous week, highlighting worries over growing supplies.
Meanwhile, Brent oil for August delivery shed 45 cents or 0.89%, to end at $50.09 a barrel after hitting a daily low of $49.80 on the ICE Futures Exchange in London. On Friday, London-traded Brent dipped $1.41 or 2.71%.
Brent futures prices are up by nearly 90% since shortly slumping below $30 a barrel in mid-February as unexpected output disruptions in Africa eased concerns over a global surplus. Brent's premium to the WTI crude contract perched at $1.53 a barrel, compared to a gap of $1.47 by Friday’s close.
Heightened Drilling Activity
The number of rigs drilling for oil in the US increased by three last week to 328 according to oilfield services provider Baker Hughes.
The renewed gain in US drilling activity sparked speculation that domestic output could be on the edge of recovering in future weeks, which underscores concerns over a supply glut.
Since declining to 13-year lows at $26.05 on February 11, US crude futures are up nearly 85% while a decrease in US shale production enhanced sentiment.
However with current prices, they make drilling efficient for some companies and the rig count might begin surging soon. The decline in U.S. production may also be sluggish.
Market players will watch out for a monthly report from the Organization of Petroleum Exporting Counties (OPEC) later in the Monday session to measure global stock and demand levels.
The International Energy Agency (IEA) will also publish its monthly outlook report on Tuesday.