(Reuters) – Oil prices dropped on Monday on signs that output from the three top crude producers, Russia, the United States and Saudi Arabia, would climb to meet concerns about supply amid strong demand.
Brent crude futures were at $76.02 per barrel at 0016 GMT, down 42 cents, or 0.55 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $67.36 a barrel, down 52 cents, or 0.8 percent, from their last settlement.
Brent and WTI have respectively fallen by 5.5 percent and 7.5 percent from peaks reached earlier in May.
The Organization of the Petroleum Exporting Countries (OPEC), as well as top producer but non-OPEC member Russia, started withholding supplies in 2017 to tighten the market and prop up prices, which in 2016 fell to a more than a decade low of under $30 per barrel.
But prices have soared since the start of the cuts, with Brent breaking through $80 per barrel earlier in May, triggering consumer concerns that high prices would crimp economic growth and stoke inflation.
To address potential supply shortfalls, Saudi Arabia, top exporter and de-facto leader of producer cartel OPEC, as well as top producer Russia said on Friday they were discussing raising oil production by some 1 million bpd.
“Crude oil prices collapsed … after reports emerged that Saudi Arabia and Russia had agreed to increase crude oil production in the second-half of the year to make up for losses elsewhere under the production cut agreement,” ANZ bank said on Monday.
Meanwhile, surging U.S. crude production also showed no sign of abating as drillers continue to expand their search for new oil fields to exploit.
U.S. energy companies added 15 rigs looking for new oil in the week ending May 25, bringing the rig-count to 859, the highest level since 2015, in a strong indicator that American crude production will continue to rise.
U.S. crude production C-OUT-T-EIA has already surged by more than 27 percent in the last two years, to 10.73 million barrels per day (bpd), bringing its output ever closer to that of Russia, which pumps around 11 million bpd.