Oil prices dropped to their lowest in three months on Monday despite OPEC efforts to curb crude output, dragged down as U.S. oil producers kept adding rigs.
Brent crude had fallen 39 cents, or 0.8 percent, to at $50.98 per barrel by 0553 GMT, its lowest since Nov. 30. It closed the previous session down 1.6 percent at $51.37.
U.S. West Texas Intermediate crude (WTI) declined 45 cents, or 0.9 percent, to $48.04 a barrel, also the lowest since Nov. 30.
Brent crude is set to drop for a fifth day, its biggest losing streak since a six-day slump that ended on Nov. 4. During this streak, the price has slumped 8.8 percent, its worst performance since the middle of June 2016.
WTI is set to decline for a sixth day, during which is has dropped 9.8 percent.
The slump in prices has occurred as more rigs are deployed to look for oil in the United States and as crude inventories in the U.S., the world’s biggest oil consumer, have surged to a record.
U.S. drillers added oil rigs for an eighth consecutive week, Baker Hughes said on Friday, as energy companies increased spending to take advantage of an earlier recovery in crude prices since the Organisation of the Petroleum Exporting Countries (OPEC) agreed to cut output.
According to energy services company, Baker Hughes, US Drillers added eight oil rigs in the week to March 10, bringing the total count up to 617, versus 386 rigs a year ago,
The increase came despite a collapse in crude futures to a three-month low because the rigs activated were based on decisions made a couple of months ago when oil prices were higher.
OPEC and other major oil producers including Russia reached a landmark agreement late last year to rein in production by almost 1.8 million barrels per day (bpd) in the first half of 2017.
Overshadowing the curbs, U.S. crude inventories surged last week by 8.2 million barrels.
“With the market still digesting the big increase in inventories, oil prices are likely to remain under pressure today,” ANZ bank said in a note.
Hedge funds and other money managers cut their net long positions in U.S. crude futures and options in the week to March 7, according to data from the U.S. Commodity Futures Trading Commission (CFTC) on Friday.
Michael McCarthy, chief market strategist at Sydney’s CMC Markets, said markets this week will be dominated by expectations that the U.S. Federal Reserve is set to hike interest rates this week.
A rise in U.S. rates would likely buoy the dollar, making greenback-denominated oil more expensive for importing countries.
“The week ahead is packed with potentially market defining releases,” said McCarthy.
“However, the key to market performance this week is the response to the U.S. lift in rates.”