Crude futures fell in early Asian trade Monday, dragged lower by the increase in active oil rigs in the U.S. and a stronger greenback.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in November CLX6, +0.08% traded at $50.25 a barrel, down $0.10 in the Globex electronic session. December Brent crude LCOZ6, +0.21% on London’s ICE Futures exchange fell $0.03 to $51.92 a barrel.
As oil is traded in dollars, a stronger dollar makes oil more expensive for traders holding a different currency. The greenback has been trading at a multimonth high and was last up 7 cents at 88.53, according to the Wall Street Journal Dollar Index BUXX, -0.09% .
Oil prices slipped over the weekend after data by industry group Baker Hughes BHI, -1.43% showed the number of active oil rigs in the U.S. last week increased by another four to 432, climbing for the 16th week.
The U.S. oil-rig count is typically viewed as a proxy for activity in the sector. After peaking at 1,609 in October 2014, low oil prices put downward pressure on production and the rig count fell sharply. But the oil rig count has generally been rising since the beginning of the summer.
“This indicates more oil is coming online, but without actual production levels it remains hard to gauge the real impact of these numbers,” said Stuart Ive, a client manager at OM Financial.
The increased U.S. production comes at a time when the world is grappling with a glut and the Organization of the Petroleum Exporting Countries is pumping at record levels. Output by Russia, a non-OPEC player, is also breaking records. In September, Russia’s daily production surged to 11.1 million, the highest in decades.
Even though OPEC members reached a preliminary pact to slash output to 33 million barrels a day from the current 33.4 million barrels a day last month, market watchers have reacted with skepticism as OPEC members have a spotty record of not disclosing their true production level.
“Some producers, especially those whose production were hurt in the past few years, probably would report a higher production level, so if and when a cut is imposed, their production level remains at a comfortable level,” said Gao Jian, an energy analyst at the Shandong-based SCI International.
BMI Research notes a major hurdle would be deciding whose estimates to use when it comes to determining the individual production quotas.
“Negotiating individual country quotas will likely reignite tensions in the group and the growing discrepancies between official and third party production estimates are a cause for concern,” the firm added.
Ahead this week, the market will watch for the weekly U.S. crude inventories and production data to be released on Wednesday. China will also release its monthly crude production and throughput data on the same day. On Friday, the Chinese customs is expected to release a detailed breakdown of China’s September crude imports and oil exports. Preliminary data showed China’s crude imports rose 18% on-year to 33.06 million tons, or 8.08 million barrels a day in September, while exports of oil products rose 21% on-year to 4.3 million tons.
Nymex reformulated gasoline blendstock for November RBX6, +0.40% — the benchmark gasoline contract — fell 3 points to $1.4933 a gallon, while November diesel traded at $1.5633, 40 points lower.
ICE gasoil for November changed hands at $463.50 a metric ton, up $2.25 from Friday’s settlement.
— George Stahl contributed to this article.
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