Oil prices fell one percent on Monday as signs of a strong recovery in U.S. oil drilling activity outweighed news that OPEC and non-OPEC producers were on track to meet output reduction goals set in December.
Global benchmark Brent crude prices were down 49 cents at $55 a barrel at 1221 GMT, while U.S. West Texas Intermediate (WTI) crude futures traded at $52.57 a barrel, down 65 cents, or 1.2 %, on Friday's close.
Ministers representing members of the Organization of the Petroleum Exporting Countries and non-OPEC producers said at a meeting in Vienna on Sunday that of almost 1.8 million barrels per day (bpd) they had agreed to be taken out of the market, 1.5 million bpd had already gone.
"A lot of this is already priced in and the U.S. rig count keeps rising and gathering pace," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.
U.S. drillers added most rigs in nearly four years last week, data from energy services firm Baker Hughes showed on Friday.
This extends an eight-month drilling recovery and is supporting signs that U.S. production will continue to rise strongly just as other producers are cutting output.
"Baker Hughes said that 35 new rigs were activated last week, fuelling fears of a significant rise in U.S. production which would offset the reduction by OPEC—and making a mockery of the Saudis' claim that they had managed to break the U.S. shale drillers," said Ashley Kelty, research analyst at Cenkos Securities.
U.S. oil production has risen more than 6 % since mid-2016, although it remains 7 % below a historic high in 2015. It is back to levels of late 2014, when strong U.S. crude output contributed to a crash in oil prices.
Oil market speculators added to bullish bets last week, however, showing they were more optimistic about higher prices.
They raised long positions on Brent crude futures by 13,931 contracts, weekly data provided by Intercontinental Exchange showed on Monday.
Equatorial Guinea, a signatory of the production cut deal, said on Monday it had made an application to join OPEC as its 14th member.
The offer was made when Mines and Hydrocarbons Minister Gabriel Mbaga Obiang traveled to Vienna on Friday but his statement provided no further details about the west African nation's bid for OPEC membership.