Oil prices slipped in choppy trade on Monday, as Wall Street slid more than 1 percent and energy market investors remained wary of growing crude supply, although tensions between Saudi Arabia and Iran gave prices some support.
U.S. West Texas Intermediate (WTI) crude futures ended Monday's session down 28 cents at $62.06 a barrel, bouncing off a session low of $61.36. Brent crude futures were at $66.29 per barrel, up 8 cents, at 2:03 p.m. ET after earlier falling to $65.39.
"The equity markets are certainly a driving factor behind this slide today," said Brian LaRose, technical analyst at United-ICAP in Jersey City, New Jersey. "Since the open, they have been hit pretty hard," he said.
Wall Street's main indexes fell as investors worried about a potential trade war and as tumbling Facebook shares dragged the tech sector. Oil prices have been increasingly moving in tandem with equities — though the correlation broke down somewhat in afternoon trade, as stock market selling accelerated, while crude futures pared earlier losses.
A rise in U.S. rig counts last week also weighed on crude prices. U.S. drillers added four oil rigs in the week to March 16, bringing the total count to 800, the weekly Baker Hughes drilling report said on Friday.
"At the current oil price level, drilling activity and thus output in the U.S. is likely to increase further," analysts at Commerzbank said in a note.
The U.S. rig count, an early indicator of future output, is much higher than a year ago as energy companies have boosted spending. Consequently, U.S. crude oil production has risen by more than a fifth since mid-2016, to 10.38 million barrels per day (bpd), pushing it past top exporter Saudi Arabia.
Only Russia produces more, at around 11 million bpd, although U.S. output is expected to overtake Russia's later this year as well.
Soaring U.S. output, as well as rising production in Canada and Brazil, is undermining efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to curb supplies and bolster prices.
Amid Russia's efforts to restrain output, Russian oil giant Rosneft said on Monday that its fourth quarter 2017 liquid hydrocarbon production reached 56.51 million tons, raising its full-year output by 7.3 percent to 225.5 million tons, or 4.53 million bpd.
Many analysts expect global oil markets to flip from slight undersupply in 2017 and early this year into oversupply later in 2018.
"Let's face it, there is still too much oil," said Matt Stanley, a fuel broker with Freight Investor Services in Dubai in a note.
Oil did get some price some support from geopolitical tensions. Prices climbed on Friday after Saudi Crown Prince Mohammed bin Salman said the kingdom would develop nuclear weapons if arch-rival Iran did.
"This week there will be ... a pricing of some geopolitical risk with the crown prince going on a visit to the United States which is likely to provide a lot of headlines against Iran and the ... deal," Petromatrix analyst Olivier Jakob said, referring to Iran's pact that has removed sanctions on that country in return for limits on its nuclear program.
President Donald Trump has told European powers they must "fix the terrible flaws" in the deal or the United States would refuse to extend its sanctions relief on Iran.
Britain, France and Germany have proposed fresh European Union sanctions on Iran over its ballistic missiles program and its role in Syria's war in a bid to save the pact, Reuters reported.
Still, Senate Foreign Relations Chair Bob Corker (R-TN) told CBS News he believes Trump will pull the United States out of the deal by the May 12 sanctions waiver deadline. He expressed skepticism that the Trump administration and European allies will manage to settle on a framework.
— CNBC's Tom DiChristopher contributed to this report.