Oil dips as global supplies rise, fresh concerns over Asian economies

Oil prices started August trading with fresh falls on Monday after several bearish reports, including rising output from OPEC, a rise in U.S. drilling and weak economic data from Asia.

Brent crude futures were trading at $43.46 per barrel at 0126 GMT (9:26 p.m. ET on Sunday), down 7 cents from their last close in July, when they already lost 12 percent over the month.

U.S. West Texas intermediate futures were trading at 41.58 per barrel, down 2 cents from July's last close. WTI shed 13 percent of value in July.

Overproduction of crude and a wave of refined products were the main factors weighing on oil.

"Last week's crude build in the U.S. and the return of production in both Canada and Nigeria was a rude awakening that rebalancing (of oil markets) is probably further away than the market thought," Singapore Exchange (SGX) said on Monday.

"Additionally, gasoline – which the majority of respondents to the SGX survey at the end of last year predicted would drive the oil complex this year – is now awash with stocks... On the paper side, some of the long positions amassed since the start of the year took profit and the net shorts are building."

Oil output from the Organization of the Petroleum Exporting Countries (OPEC) is likely in July to have reached its highest in recent history, at 33.41 million barrels per day (bpd) in July from a revised 33.31 million bpd in June, a Reuters survey found on Friday.

In OPEC-member Libya, the state oil company said on Sunday it welcomed the reopening of blockaded oil ports following a deal between the U.N.-backed government and an armed force, saying it would begin work to restart disrupted exports soon.

In the United States, drillers last week added oil rigs for a fifth consecutive week as part of the biggest monthly rig count increase in over two years, Baker Hughes Inc said on Friday, adding three oil rigs to a total of 374, compared with 664 a year ago.

Just as oil supplies were rise, new economic concerns arose.

China's manufacturing activity unexpectedly shrank in July, with the official Purchasing Managers' Index (PMI) standing at 49.9 compared with 50 in June, putting it just below the 50-point mark that separates growth from contraction.

In South Korea, July exports fell at the fastest pace in three months, data showed on Monday, far worse than expectations.

Exports fell 10.2 percent on-year to $41.05 billion in July, their biggest fall since April this year.

Source: Reuters

Asian economies, OPEC, oil prices, oil rigs