Crude oil futures decline as oversupply concerns linger

Investing.com - Crude oil futures slumped on Monday, as concerns over a glut in global supplies remained in focus.

On the New York Mercantile Exchange, crude oil for delivery in April shed 54 cents, or 1.08%, to trade at $49.23 a barrel during European morning hours.

Industry research group Baker Hughes (NYSE:BHI) said Friday that the number of rigs drilling for oil in the U.S. fell by 33 last week to 986, the lowest since June 2011.

The number of oil rigs has declined in 17 of the last 20 weeks since hitting an all-time high of 1,609 in mid-October.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

However, total U.S. crude oil inventories stood at 434.1 million barrels as of last week, the most in at least 80 years, indicating that cheap prices have yet to affect output.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for April delivery dipped 57 cents, or 0.91%, to trade at $62.01 a barrel.

Meanwhile, the spread between the Brent and the WTI crude contracts stood at $12.78 a barrel, compared to $10.29 by close of trade on Friday.

London-traded Brent prices rose $2.21, or 3.3%, last week, as worries over disruptions to exports and production in Libya and Iraq buoyed prices.

Iraq's oil minister, Adel Abdel Mehdi, said on Sunday he expected to see crude prices at around $65.

Saudi Arabian oil minister Ali al-Naimi said last week that oil markets have settled down after a prolonged period of volatility late last year.

London-traded Brent prices soared $9.54, or 15.31%, in February, the first monthly gain since June and the biggest monthly increase in nearly six years.

Oil prices have fallen sharply in recent months as the Organization of Petroleum Exporting Countries resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.

Meanwhile, investors digested a pair of conflicting reports on China's manufacturing sector.

The HSBC final manufacturing index for February released earlier rose to 50.7, above the flash reading of 50.1.

In contrast, the official China's manufacturing purchasing managers' index published on Sunday came in at 49.9, just above expectations for a reading of 49.7 and up slightly from a two-year low of 49.8 in January.

China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.15% to 95.44, the highest level since 2003.

A stronger dollar makes U.S. commodities more expensive for importers holding other currencies such as yen or euro.