NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures pressed lower at the open Friday morning as investors booked profits, and concerns over global oversupply, continue to weigh on the market ahead of the release later Friday of the weekly U.S. oil rig-count report.
The worries about supply were prompted by a Reuters report saying some members of the Organization of Petroleum Exporting Countries have slackened on their pledge to cut production. Reuters said this morning that its latest survey estimates OPEC oil production by rose by 145,000 bpd in July versus June.
June OPEC output was also higher than May, which suggests either some members are not complying with their 15-month agreement to cut output by a combined 1.2 million bpd through March 2018 or member exempt from the cuts are boosting their output.
OPEC's compliance slumped to 78% in June, down from 95% for May, amid higher output from several of its members, the International Energy Agency said last week. A joint OPEC and non-OPEC compliance monitoring committee will meet in Russia July 24 to review compliance record and discuss adding Libya and Nigeria to their supply agreement.
The OPEC production cuts have also been countered by the relentless increase in U.S. output. Domestic production is up 5.4% this year and has increased for the past three straight weeks to a 9.429 million bpd two-year high, according to most recent EIA data.
The number of rigs drilling for new U.S. oil supply has also climbed since last year. A fresh rig-count report is due out later Friday from Houston-based oil services firm Baker Hughes, Inc.
At 9:00 AM ET, September West Texas Intermediate crude oil futures contract fell $0.41 to $46.51 bbl. September Brent crude futures on ICE were 41cts lower at $48.89 bbl.
The August ULSD futures contract dropped 1.78cts to $1.5258 gallon and the August RBOB futures contract slumped 2.81cts to $1.6116 gallon.
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