London — Oil prices extended losses on Monday as Saudi Arabia and Russia said they may increase supplies while US production gains show no signs of slowing.
Brent crude futures stood at $75.35 a barrel at 9.13am GMT, down $1.09 from the previous close and after touching a three-week low of $74.49 earlier in the session.
US West Texas Intermediate (WTI) crude futures were at $66.69, down $1.19, after hitting a six-week low of $65.80.
Oil cartel Opec and other producers led by Russia began withholding 1.8-million barrels per day of supplies in 2017 to tighten the market and prop up prices that fell to their lowest in more than a decade in 2016 at less than $30 a barrel.
Prices have soared since the start of the cuts last year, with Brent breaking through $80 earlier in May, triggering concerns that high prices could crimp economic growth and stoke inflation.
“The pace of the recent rise in oil prices has sparked a debate among investors on whether this poses downside risks to global growth,” Chetan Ahya, chief economist at US bank Morgan Stanley, wrote in a weekend note.
To address potential supply shortfalls, Saudi Arabia, de-facto leader of Opec and top producer Russia have been in talks about easing the cuts and raising oil production by 1-million barrels per days.
“Given that our crude balance is short some 825,000 barrels per day over [the second half of the year], a gradual increase of about 1-million barrels per day would probably limit stock draws to quite some extent,” consultancy JBC Energy said.
Meanwhile, surging US crude production showed no sign of abating as drillers continued to expand their search for new oilfields to exploit.
US energy companies added 15 rigs looking for new oil in the week ending May 25, bringing the rig count to 859, its highest since 2015, in a strong indication that American crude production would continue to rise.
US crude output has already surged more than 27% in the past two years, to 10.73-million barrels per day, ever closer to Russia’s 11-million barrels per day.