Oil prices have fallen as signs of a strong recovery in U.S. oil drilling activity outweighed news that OPEC and non-OPEC producers were on track to meet output reduction goals set in December. Sonia Legg reports
A big success - that's the way Russia and OPEC see the recent deal to reduce oversupply in global oil markets. (SOUNDBITE) (Russian) RUSSIAN ENERGY MINISTER, ALEXANDER NOVAK, SAYING: "We can see the situation has stabilised and there is no volatility, the prices are at a relatively high level. And this is because the agreement is being fulfilled." That was Sunday - then markets opened with a President Trump in the White House. He's made no secret of his support for U.S. shale. As a result there's been a strong recovery in America's drilling activity. Worries about that more than canceled out the boost provided by OPEC, with prices falling one per cent. (SOUNDBITE) (English) CHRIS BEAUCHAMP, MARKET ANALYST, IG, SAYING: "The output cut did what it did but it only took us back to April 2015 production levels, if that, and therefore there is a lot more to be done to get the oil market back into balance between demand and supply." There are fears if the US ramps up output other non-OPEC producers - like Iraq, Iran and Africa - might do the same. And Trump certainly wants to reduce his reliance on the Middle East. (SOUNDBITE) (English) CHRIS BEAUCHAMP, MARKET ANALYST, IG, SAYING: "I think it is something they will push ahead with regardless of the impact on prices and that signals a big warning for OPEC in the next few months really, is their deal going to be undermined by further production increases in the U.S." Recent data showed U.S. drillers added more rigs last week than at any time in the past four years. And U.S. oil production has risen more than 6 percent since mid-2016. It remains 7 percent below a 2015 high. But it's back to late 2014 levels when strong U.S. crude output contributed to a crash in oil prices.