Crude oil tumbled on Monday reversing earlier gains, as rising U.S. output dominated markets, despite rig drilling activity slowdown. Light sweet crude oil futures traded down 1.27% at $61.25 on the NY Mercantile Exchange.
The commodity got off a strong start this year with the West Texas Intermediate (WTI) crude futures rising 7.1% in January. Despite the 4.8% drop in crude in February on the broad stock selloff, crude futures still trade above the $60 level.
Last week, Baker Hughes reported that energy companies cut back 4 rigs to 796. The total U.S. rig count rose by 3 to 984 due to rise in gas.
Activity remained much higher than last year when just 617 rigs were active. Market analysts expect U.S. crude oil production to climb further from last week’s all-time high of 10.37 million barrels per day. This is above Saudi Arabia’s output levels and within reach of the world’s biggest crude producer Russia.
Also, an upbeat jobs data helped support prices of oil. The economy added 313,000 non-farm jobs in February, according to the Labor Department. The worker pay fell to 2.6% from 2.8%. The unemployment rate held at 4.1% in February.
Among the main oil-related companies, McDermott International and Baker Hughes were selected for engineering, procurement, construction and installation for SURF and SPS for BP’s Tortue/Ahmeyim Field Development. Goodrich Petroleum updated and accelerated preliminary capital expenditure budgets for 2018 and 2019 following its recent $23 million asset sale.
According to an interview of S&P Global Platts global head of oil analytics Gary Ross by the Wall Street Journal, the pressure is going to build on crude prices as oil demand is growing at a rapid pace and the market will absorb all the extra supply.
When looking at the natural gas futures, market experts predict it to remain vulnerable in the near-future as the coldest winter has effectively passed and the extreme temperatures are expected to increase gas consumption.