Oil prices fell in early trading on Monday as the chances of Middle East producers agreeing to curb overproduction appeared to fade, while U.S. output remains stubbornly high.
Singapore: Oil prices fell in early trading on Monday as the chances of Middle East producers agreeing to curb overproduction appeared to fade, while U.S. output remains stubbornly high.
Front month U.S. West Texas Intermediate (WTI) crude futures were trading at $36.38 per barrel at 0302 GMT, down 1.1 percent or 41 cents cents from their last settlement.
International Brent futures were down 0.9 percent or 34 cents at $38.33 a barrel.
The falls extended a 4 percent tumble on Friday when Saudi Arabia said it would only participate in a global freeze of its output if its rival Iran also took part, something Tehran has so far dismissed.
Adding to concerns of a global glut which has pulled down prices by as much as 70 percent since 2014, U.S. production has remained high despite steep cuts in drilling for new reserves as well as a jump in bankruptcies.
"The U.S. oil rig count dropped further this week, with a total 10 rigs idled," Goldman Sachs said.
"The current rig count implies U.S. production... would decrease by 705,000 barrels per day yoy (year-on-year) on average in 2016, and by 375,000 barrels per day yoy in 2017," it added.
So far, U.S. production remains stubbornly high, at over 9 million barrels per day, as operators keep their oil wells gushing in a struggle to service debt and stay alive.
Reflecting a spreading belief that crude prices might not recover by much any time soon, hedge funds have cut their net long postitions which would benefit from further price rises in WTI futures for the first time in six weeks.
Despite a pick-up in recent economic data, analysts also poured cold water on recent hopes that Asia`s economic prospects were improving, which could support oil demand and prices.
"Some data has started to perk up, notably China`s manufacturing PMIs for March. Across Asia, exports, production and even consumer spending should also show a bit more swing in the coming months," said HSBC`s Frederic Neumann on Monday.
"Still, fundamentally, have things really improved? No. It`s mostly that a more dovish Fed and a weaker dollar have put a temporary gloss on things.
Asia continues to face a structural growth problem – one that will not be cured in the space of a few, short months," he added.