Crude oil prices display a sizeable loss this morning as oil drillers in the US continue to add more rigs, resulting in high levels of production.
Crude oil prices have decreased by over 1.5% this morning as oil drillers in the United States continue to add more rigs, while traders have also cashed in on their long positions due to pessimism in regards to an increase in oil prices; further fuelling bearish sentiment.
Brent crude oil futures were trading at $47.19/b early this morning, a drop of $0.82/b compared to Friday, while the US benchmark, WTI fell by $0.86/b.
The main cause behind the reduction in price is a rise in oil drilling in the US, indicating that producers are operating at a profit at current levels. According to data released on Friday, active oil rigs have increased in 10 of the last 11 weeks, the longest period with no rig cuts since 2011, with 414 rigs currently in operation.
Oil prices have dropped by around 6% since the 8th of September, in contrast to increases of around 10% at the start of the month when Brent hit close to $50/b a barrel.
Market traders also appear less confident in higher oil prices and have cut their long positions for the second week running, which is a further contributor to this morning's losses. Traders await news of a potential freeze deal which would help support the market, although it is thought any cuts in production would only have a minimal impact on prices initially.
Meanwhile, the market could be pressured down further by a potential flood of refined oil exports from China towards the end of the year due to weak demand in the country.