Oil futures dipped in early Asian trade on Monday on worries about global oversupply after a higher U.S. rig count pointed to rising U.S. shale production, while a stronger dollar also put pressure on crude.
U.S. West Texas Intermediate crude futures fell 5 cents to $50.55 a barrel after settling 25 cents higher in the previous session.
International benchmark Brent futures slipped 11 cents to $53.42 a barrel. The March contract closed the previous session down 13 cents at $52.83 a barrel.
Both contracts posted their worst quarterly loss since late 2015 in the March quarter. U.S. futures fell nearly 6 percent from the previous quarter, while Brent lost 7 percent as rising inventory levels outpaced output cuts by OPEC and non-OPEC members.
Crude oil prices staged a three-day rally last week amid expectations members of the Organisation of the Petroleum Exporting Countries (OPEC) and non-members such as Russia would extend production cuts beyond June.
But prices fell on Friday after energy services firm Baker Hughes said the U.S. rig count increased by 10 to 662 last week, making the first quarter the strongest for oil rig additions since mid-2011.
Rising supplies tempered data from Asia that suggested the region’s buoyant economy would ensure solid demand for energy.
Manufacturing data showed factories across much of Asia posted another month of solid growth in March.
Purchasing managers’ index (PMI) data from China showed its factories expanded for a ninth straight month in March, although the pace slipped as new export orders slowed.
The U.S. dollar index rose against a basket of currencies on Monday. A strong dollar makes greenback-denominated commodities including oil more expensive for holders of other currencies.
Iraq plans to increase its oil output capacity to 5 million barrels per day before the end of the year, but Baghdad has assured OPEC it will fully comply with the pact to cut oil supply, Oil Minister Jabar al-Luaibi and OPEC Secretary General Mohammed Barkindo said on Sunday.
Russian oil shipped by state pipeline monopoly Transneft to ports for export rose to 2.944 million barrels per day (bpd) in March, or 12.452 million tonnes, from 2.819 million bpd in February.
Overall, market sentiments still remains bearish and as traders, we’ll be looking for opportunities to go short on this market.