Oil prices fell on Monday as an uptick in U.S. drilling and concerns about demand due to the slow progress in U.S.-Chinese trade talks overshadowed support from OPEC-led supply restraint.
Benchmark Brent oil fell 16 cents or 0.26 percent to $61.94 a barrel at 1220 GMT.
U.S. West Texas Intermediate (WTI) crude fell 41 cents or 0.78 percent to $52.31.
“Oil prices are still trying to figure out what lead to follow. On the one hand, there is the OPEC+ cut story, now coupled with increasing issues around Venezuelan supply”, Vienna-based consultancy JBC Energy said.
“At the same time, it has to be argued that a lot of the economic data that has been released over the last few days has really not been too encouraging, and U.S.-Chinese trade talks are also seemingly not progressing very fast.”
Energy firms in the United States last week increased the number of oil rigs operating for the second time in three weeks, pointing to a further rise in U.S. crude production, a weekly report by Baker Hughes said on Friday.
WTI prices were also weighed down by the closure of the second largest crude distillation unit (CDU) at Phillips 66’s Wood River, Illinois, refinery following a fire on Sunday.
Trade talks between Washington and Beijing resume this week with a delegation of U.S. officials travelling to China for the next round of negotiations.
The United States has threatened to increase tariffs already imposed on goods from China on March 1 if the trade talks do not produce an agreement.
U.S. President Donald Trump said on Thursday he did not plan to meet with Chinese President Xi Jinping before the March 1 deadline, dampening hopes of a quick trade pact.
Prices have been buoyed, however, by output curbs from the Organization of the Petroleum Exporting Countries and its allies, including Russia, a group known as OPEC+.
The deal, effective from January, aims to cut 1.2 million bpd until the end of June to forestall an overhang, in a move producers and many analysts expect to soon help balance supply and demand.
Suhail Al Mazrouei, the Energy Minister of the United Arab Emirates, said on Monday the oil market should achieve this balance in the first quarter of 2019.
OPEC and its allies meet on April 17 and 18 in Vienna to review the agreement.
U.S. sanctions on Venezuela, along with older sanctions on fellow OPEC member Iran, have also prevented crude prices from falling further.