Oil futures lost ground early Monday, giving back a small piece of strong gains last week that sent crude to a nearly one-month high.
West Texas Intermediate crude for December delivery CLZ19, +0.07% was off 19 cents, or 0.3%, at $56.47 a barrel on the New York Mercantile Exchange. December Brent crude BRNZ19, +0.03%, the global benchmark, fell 20 cents, or 0.3%, to $61.53 a barrel.
WTI on Friday ended at the highest level for a front-month contract since Sept. 24, scoring a 5.2% weekly rise, according to Dow Jones Market Data. Brent crude saw a 4.4% weekly advance to close Friday at its highest since Sept. 26.
Gains last week were driven in large part by supply concerns, particularly a large drop in U.S. oil product inventories. On Friday, data from oil-field services firm Baker Hughs showed the number of active U.S. drilling rigs fell by 17 last week to 696—the lowest tally since April 2017.
Growth in U.S. oil production will be a large driver in determining the scope of production cuts by the Organization of the Petroleum Exporting Countries and its allies, said Carsten Fritsch, commodity analyst at Commerzbank, in a Monday note. OPEC and its allied producers, namely Russia, must decide whether to extend or modify an agreement on output cuts that’s due to expire in April.
“As yet, the decline in [U.S.] drilling activity is not reflected in lower production growth, but this is probably only a question of time. It is already the case that shale oil production is rising noticeably only in the Permian Basin, and only slightly at Bakken,” Fritsch said. “It is already falling in other shale plays such as Eagle Ford and Anadarko.”
In other energy trading, December gasoline RBZ19, +0.18% was off 0.4% at $1.629 a gallon, while December heating oil HOZ19, -0.07% declined 0.2% to $1.966 a gallon. December natural-gas futures NGZ19, +2.89% were up 2.4% at $2.517 per million British thermal units.