Oil Prices Fall On Dimming Prospect Of Output Restraint

Oil prices slipped in early trading on Monday as the chances fell of Middle East producers agreeing to restrain overproduction, while U.S. output has remained stubbornly high despite spiraling debt levels and bankruptcies.

Front month U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $36.23 per barrel at 0014 GMT, down over half a dollar from their last settlement.

International Brent futures LCOc1 were down 45 cents at $38.22 a barrel.

The falls extended a 4 percent tumble on Friday when Saudi Arabia said it would only participate in a global freeze of its output if its rival Iran also took part, something Tehran has so far dismissed.

Adding to concerns of a global glut that has pulled down prices by as much as 70 percent since 2014, U.S. production has remained stubbornly high despite steep cuts in drilling for new reserves as well as a jump in bankruptcies.

"In the U.S., rigs targeting oil production declined by 10 to stand at 362 active rigs [last week]," ANZ bank said.

Yet despite the ongoing decline in the rig count, U.S. production has remained stubbornly high as bankruptcies are so far having little effect on overall output while operators keep their oil wells gushing in a struggle to service debt and stay alive.

Reflecting a spreading belief that crude prices might not recover by much any time soon, hedge funds have cut their net long positions, which would benefit from further price rises in WTI futures for the first time in six weeks.