Oil prices broke their three-day losing streak on Monday morning despite continued overdemand and increasing production in the United States. U.S. drillers added eight oil rigs last week, bringing the total count to 741, the most since April 2015. Brent crude futures were up 1.6 percent to $48.92 per barrel as of 7:10am EST on Monday, and U.S. WTI futures were up 1.44 percent to $16.49 per barrel.
U.S. output is nearly 9.3 million barrels per day, nearly 10 percent higher currently than it was a year ago. The U.S. Energy Information Administration expects this number to surpass 10 million barrels per day by 2018, posing a significant challenge to Saudi Arabia which is currently the top oil exporter. The increase in U.S. production is also directly challenging OPEC’s production cuts which are aimed at controlling oil prices and preventing them from plummeting further. Oil prices hit one-month lows last week and are down nearly 10 percent since the start of the year.
Today’s oil price increase was largely based on speculation that a tighter market in the second half of the year will buoy prices, a sentiment based more on optimism than actual market data. Also contributing to the optimism was a Nigerian pipeline leak discovered on Friday that is expected to reduce supply from the region. Safe-haven gold also broke its three-day losing streak on Monday by rising to $1,269 per ounce.