U.S. energy firms last week added 12 oil rigs in the week to November 9 looking for new reserves, bringing the total count to 886, the highest level since March 2015, Baker Hughes energy services firm said on Friday.
Benchmark Brent crude, which had been trading above US$80 a barrel recently, now hovers just over US$70 after the U.S. sanction waivers on Iran.
"Sky-high production in the USA, coupled with incremental barrels coming from Saudi Arabia and Russian Federation is starting to impact oil market balances".
Saudi Arabia's energy minister Khalid al-Falih seemed to have stopped the bleeding in the markets on Monday, saying the oil cartel OPEC and its allies agree there's a need to cut oil supplies next year by around 1 million barrels per day against October levels to balance out supply and demand.
A majority of OPEC and allied oil exporters support a cut in the global supply of crude, Oman Oil Minister Mohammed bin Hamad al-Rumhi said on Sunday.
Crude oil futures have spiked in early trade on Monday, following reports that Saudi Arabia will cut production levels in December.
The slide also comes during signs of a softer-than-expected impact from United States sanctions on Iran oil exports. "Oil markets are significantly oversold in our view, and we remain convinced that both Brent and [US benchmark] WTI will rebound from their current bearish market mode", said analysts at MUFG bank.
Brent crude futures LCOc1 reversed course late in the session, settling down 6 cents at $70.12 a barrel.
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"Oil prices above $80 are never welcome by OPEC customers, and that seems to be a similar consensus among OPEC, non-OPEC and U.S. producers".
"We are going to do everything we can to keep inventories and supply-demand fundamentals within a reasonably narrow band around balance, and we believe markets will calm down."
Iraq and Saudi Arabia agreed on Saturday to work together to stabilise oil markets, Iraq's Oil Ministry spokesman Asim Jihad said, without giving further details. "If that means trimming supply by a million [barrels per day], we will do it". "We have to wait and see how the market is unfolding".
"Equities and oil were pretty much falling in lock-step", said Josh Graves, senior market strategist at RJO Futures in Chicago.
The nearly unexpected October crash in global crude prices raised concerns from stakeholders who called on OPEC to act swiftly towards remedying the situation.
Saudi Energy will export 500,000 fewer barrels a day in December than this month, taking the lead in OPEC to counter the price rout battering the finances of group members and energy companies alike.