Singapore: Oil prices dipped slightly during the early hours of Asian trading on Monday as fresh oversupply concerns spurred by an increase in operational US rigs bridled a recent rally.
This follows a week of gains that lifted US benchmark West Texas Intermediate (WTI) above USD 40 for the first time since December, buoyed by a sharp drop in the dollar, making oil more affordable, and revived optimism that producers would strike a deal to freeze output.
At around 0300 GMT, WTI for delivery in April fell 43 cents (1.09 per cent) to USD 39.01. Brent for May dropped 16 cents to USD 41.04.
"The weekly rig count for the US reflected an increase for the first time after 12 weeks of cuts," EY analyst Sanjeev Gupta said in a note.
The Baker Hughes weekly count of oil rigs operating in the United States rose by one after falling for more than two months running, while gas rigs dropped by five.
IG Markets market strategist Bernard Aw saw the price drop as a "knee-jerk reaction", adding that it was still unclear if US production will increase.
Qatar's energy minister, Mohammed al-Sada, confirmed last week that exporters from within and outside the OPEC cartel will meet April 17 in Doha, stoking hopes of an agreement to ease a global supply glut.
The initiative is backed by 15 countries accounting for about 73 percent of worldwide output, said the minister, who also serves as president of the OPEC.