US crude settles at $52.93, down 1.7% on concerns about rise in US drilling

An oil pump jack in Gonzales, Texas.
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Oil futures fell about 2 percent on Monday as signs of rising U.S. crude output continued to weigh on prices and an OPEC report showing high compliance with last year's landmark production-cut deal underwhelmed investors.

Global benchmark Brent crude futures were down $1.09, or 1.9 percent, at $55.61 a barrel by 2:34 p.m. ET (1934 GMT), near the low of the session.

West Texas Intermediate (WTI) crude futures ended Monday's session 93 cents, or 1.7 percent, lower at $52.93 a barrel, also near its lowest level for the day.

"The good compliance rate of OPEC seems to be priced in. The U.S. rig count from Friday is weighing, the numbers support the shale comeback story," said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.

Goldman expects jump in US crude imports to reverse

U.S. shale oil production is expected to rise in March by 80,000 barrels per day to 4.87 million barrels per day, data from the U.S. Energy Information Administration showed on Monday.

U.S. oil drillers over the past month have added the most drilling rigs since 2012, bringing the total count to 591 rigs, the highest since October 2015, Baker Hughes said in its weekly report.

This rise in U.S. drilling activity is a growing source of concern to some oil market investors about surging U.S. oil output.

Speculators cut net long positions on Brent last week by 10,000 positions, weekly ICE data showed, highlighting these concerns.

In turn, bullish gasoil bets rose to their highest level in four years as demand is expected to rise on the back of cold weather and maintenance.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, agreed late last year to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017.

Gartman: Material event taking place in oil patch

OPEC reported Saudi Arabia made a large cut in its crude output in January to support prices and lessen a glut, helping boost compliance with the group's supply-reduction deal to a record high.

The report said production by all OPEC members, including cut-exempted Nigeria and Libya, fell by 890,000 bpd to 32.14 million bpd. The reductions amount to 93 percent compliance, according to a Reuters calculation based on the OPEC figures.

That confirmed reports by secondary sources last week that showed a high degree of compliance.

Crude supply from the 11 OPEC members with production targets under the deal fell to 29.888 million bpd in January, according to figures from secondary sources which OPEC uses to monitor its output.

Analysts at ABN Amro are skeptical about production cuts delivering higher oil prices and reduced Brent forecasts for the first half of this year to $50 from $55 a barrel.

— CNBC's Tom DiChristopher contributed to this report.