Investing.com - Oil prices headed lower on Monday as concerns over rising output convinced traders to take profit on the back of strong gains that took U.S. crude to a three-and-a-half year high last week.
New York-traded West Texas Intermediate crude futures fell 32 cents, or about 0.43%, to $73.83 a barrel by 10:37AM ET (14:37GMT).
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded down $1.21, or 1.5%, to $78.02.
U.S. President Donald Trump surprised traders by announcing an impromptu agreement with Saudi Arabia to add more supply to increasingly tight oil markets.
In an early morning tweet on Saturday, Trump said Saudi Arabia's King Salman had agreed to his request to increase crude production “maybe up to" 2 million barrels to help offset a decline in supply from Iran and Venezuela.
Meanwhile, a Reuters survey out Monday showed Saudi Arabia's output is up by 700,000 barrels per day (bpd) from May.
At the same time, Russian output rose to 11.06 million bpd in June from 10.97 million bpd in May, the country’s Energy Ministry said on Monday.
A week ago, OPEC and its allies, including Russia, agreed to boost supplies, easing curbs in place since the start of 2017 in order compensate for surprise supply outages from the likes of Libya and Venezuela.
Having reached 152% compliance in May, major oil producers agreed to drop that compliance to 100%.
The cartel noted that there were no specific allocations for individual members, as some countries that did not have spare capacity would be unable to increase output
Saudi Arabia, the de facto leader of OPEC, said on Saturday the move would translate into a nominal output rise of around 1 million bpd.
However, unplanned supply stoppages from Libya, Venezuela and more recently, an outage at Canada's Syncrude upgrader that has especially strained North American markets, coupled with U.S. sanctions against OPEC-exporter Iran, are leading traders to bet that the increase in output will be unable to counteract rising demand.
In other energy trading, gasoline futures slumped 1.5% $2.1155 a gallon by 10:38AM ET (14:38GMT), while heating oil sank 1.4% to $2.1779 a gallon.
Lastly, natural gas futures traded down 2.2% to $2.859 per million British thermal units.