Oil prices edge lower to start the week as glut concerns linger

Oil prices edged lower on Monday, as ongoing worries over ample global supplies dampened sentiment.

The U.S. West Texas Intermediate crude September contract was at $48.55 a barrel by 8:55AM ET (1255GMT), down 27 cents, or around 0.6%. It slumped to its lowest in around two-and-a-half weeks at $47.98 in the prior session.

Elsewhere, Brent oil for October delivery on the ICE Futures Exchange in London shed 37 cents, or about 0.7%, to $51.73 a barrel.

Oil prices settled higher on Friday, but still ended the week with a loss, amid indications that OPEC members boosted production in July, despite the current pact to reduce output.

According to the International Energy Agency, OPEC’s compliance with the cuts had fallen to 75% last month, the lowest since the deal began in January.

OPEC and 10 producers outside the cartel, including Russia, agreed since the start of the year to slash 1.8 million barrels per day in supply until March 2018 in order to reduce a global supply glut and rebalance the market.

However, so far, the deal has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, as well as a relentless increase in U.S. shale output.

Oilfield services firm Baker Hughes reported Friday that its weekly count of oil rigs operating in the U.S. ticked up by three rigs to a total of 768 last week.

The weekly rig count is an important barometer for the drilling industry and serves as a proxy for oil production and oil services demand.

In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.

Elsewhere on Nymex, gasoline futures for September declined 1.4 cents, or almost 0.9%, to $1.595 a gallon, while September heating oil dipped 0.8 cents, or roughly 0.5%, to $1.626 a gallon.

Natural gas futures for September delivery slipped 1.5 cents, or 0.5%, to $2.969 per million British thermal units.