Oil Prices Tumble 2% on Rising U.S. Rig Count

Investing.com - Oil prices tumbled to start the week on Monday, after data late Friday that showed that U.S. energy firms added drilling rigs for the first time this year.

Baker Hughes reported Friday that the number of domestic rigs drilling for oil rose by 10 to 862 in the week to Jan. 25. That largely reversed the previous week's drop, which was the sharpest in over three years and which came amid a slew of statements from U.S. producers saying they would cut capital expenditures this year.

The rebound still left the rig count below where it was at the end of the year, but still indicated a relatively buoyant level of drilling that will support actual output in the coming months.

U.S. West Texas Intermediate crude futures for March delivery on the New York Mercantile Exchange slumped $1.08, or around 2%, to $52.61 a barrel by 8:30AM ET (13:30 GMT).

Elsewhere, Brent oil for April delivery on the ICE (NYSE:ICE) Futures Exchange in London sank $1.07, or about 1.7%, to $60.52 a barrel.

Venezuela is likely to stay in the headlines this week, as turmoil in Caracas triggered concerns that its crude exports could soon be disrupted.

Amid violent street protests, Venezuela's opposition leader Juan Guaido declared himself interim president last week, winning backing from Washington and large parts of Latin America, including Brazil and Colombia.

That prompted Nicolas Maduro, the country's leader since 2013, to cut ties with the U.S., although he later reversed the decision after the U.S. signaled it could impose sanctions on Venezuela's oil exports.

After ending 2018 in freefall, oil has gained roughly 15% since the start of January, the largest increase in percentage terms in the first month of the year since 2005.

Overall, the recent advance for the energy complex has been powered by evidence of a decline in global output.

Saudi Arabia-led OPEC and its non-member allies led by Russia agreed to collectively cut production by a total of 1.2 million barrels per day (bpd) during the first six months of 2019 in an effort to stave off a global glut in supplies.

Saudi Oil Minister Khalid al-Falih told Russia's RIA Novosti news agency earlier Monday that the kingdom would cut its output by more than agreed in the December deal, and added that the Venezuelan situation was having no impact on the global oil market for now.

In other energy trading, gasoline futures dropped 1.7% to $1.381 a gallon, while heating oil fell 1.5% to $1.859 a gallon.

Natural gas futures plunged 5.8% to $2.893 per million British thermal units, on the back of changing winter weather forecasts.

-- Reuters contributed to this report

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