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UPDATE 2-Oil prices fall as US rig count stokes oversupply worries

Published 03/04/2017, 02:46 pm
Updated 03/04/2017, 02:50 pm
© Reuters.  UPDATE 2-Oil prices fall as US rig count stokes oversupply worries
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* Investors waiting for new indicators on crude price -analyst

* PMI data from Europe, U.S. could give oil market direction

* Crude prices post worse quarterly loss since late 2015 (Updates prices)

By Keith Wallis

SINGAPORE, April 3 (Reuters) - Oil futures dipped on Monday as a higher U.S. rig count indicated rising shale output and stoked worries about global oversupply, while a stronger dollar also pressured prices.

International benchmark Brent futures LCOc1 slipped 15 cents, or 0.3 percent, to $53.38 a barrel by 0440 GMT. The March contract closed the previous session down 13 cents at $52.83 a barrel.

U.S. West Texas Intermediate crude futures CLc1 fell 8 cents, or 0.2 percent, to $50.52 a barrel after settling 25 cents higher in the previous session.

Both contracts posted their worst quarterly loss since late 2015 in the March quarter. U.S. futures fell nearly 6 percent from the previous quarter, while Brent lost 7 percent as rising inventory levels outpaced output cuts by OPEC and non-OPEC members.

Crude prices staged a three-day rally last week amid expectations members of the Organisation of the Petroleum Exporting Countries (OPEC) and non-members such as Russia would extend production cuts beyond June.

But prices fell on Friday after energy services firm Baker Hughes said the U.S. rig count increased by 10 to 662 last week, making the first quarter the strongest for oil rig additions since mid-2011. RIG/U

"We could be getting close to the end of the rally. Today's pause may be significant in terms of market direction - we'll see what happens in Europe and the U.S. later today," said Ric Spooner, chief market analyst at Sydney's CMC Markets.

"We've had a pretty significant rally in the past week, driven by Libya's production not doing as well due to disruptions, good utilisation rates by U.S. refiners and talk of OPEC and non-OPEC members extending production cuts for another six months," Spooner said.

"Now the market may have priced all those factors in and investors are waiting for additional indicators to give oil prices direction."

That could come later on Monday when Europe and the U.S. release purchasing managers' index (PMI) data.

PMI data from China on Saturday showed the country's factories expanded for a ninth straight month in March but at a softer pace as new export orders slowed. China PMI figures were pretty positive - they provide background support for oil prices," Spooner said.

The U.S. dollar index .DXY rose against a basket of currencies on Monday. A strong dollar makes greenback-denominated commodities including oil more expensive for holders of other currencies.

Iraq plans to increase its oil output capacity to 5 million barrels per day before the end of the year, but Baghdad has assured OPEC it will fully comply with the pact to cut oil supply, Oil Minister Jabar al-Luaibi and OPEC Secretary General Mohammed Barkindo said on Sunday. GRAPHIC on Brent oil

http://tmsnrt.rs/2nPMhiw GRAPHIC on U.S. crude

http://tmsnrt.rs/2nPCetU

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