Oil Prices Back Off Recent Highs In Cautious Start To Week

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© Reuters.  Oil starts the week lower© Reuters. Oil starts the week lower

Investing.com – edged lower for the second session in a row on Monday, moving further away from more than three-year highs touched recently, as a rise in U.S. drilling for new production dampened sentiment.

U.S. drillers added 10 oil rigs in the week to May 11, bringing the total count to , the highest number since March 2015, General Electric (NYSE:)’s energy services firm said in its closely followed report on Friday.

That was the sixth consecutive weekly increase in the rig count, underscoring worries about rising U.S. output.

Indeed, domestic oil production – driven by shale extraction – rose to an all-time high of 10.70 million barrels per day (bpd) last week, the Energy Information Administration (EIA) said.

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Only currently produces more, at around 11 million bpd.

The relentless increase in U.S. production marked one of the few factors tamping back crude in an otherwise bullish environment in recent weeks.

-traded dipped 36 cents, or 0.5%, to $70.34 a barrel by 3:20AM ET (0720GMT), after slipping 66 cents, or 0.9%, on Friday.

Meanwhile, , the benchmark for oil prices outside the U.S., declined 47 cents, or 0.6%, to $76.65 a barrel. It lost 35 cents in the last session.

WTI and Brent last week reached their highest since November 2014 at $71.89 and $78.00 per barrel respectively, after U.S. President Donald Trump walked away from an international nuclear deal with and reimposed “the highest level of sanctions” against the country.

Some analysts have said the reinstatement of sanctions could lead to tighter global oil supplies as they make it more difficult for Iran to export oil.

Iran, which is a major Middle East oil producer and member of the Organization of the Exporting Countries (), resumed its role as a major oil exporter in January 2016 when international sanctions against Tehran were lifted in return for curbs on Iran’s nuclear program.

Exiting the deal leaves the U.S. at odds with Europe and other parties to the deal, who will try to keep it in place.

It may also increase tensions in the Middle East, especially between Israel and Iran.

Oil traders looked ahead to the due later in the global day to assess global supply and demand levels. The data will give traders a better picture of whether a global rebalancing is taking place in the oil market.

Fresh weekly data on U.S. commercial crude inventories on and to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise will also capture the market’s attention .

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Source: Investing.com