Oil falls as signs of U.S. output rise overshadow OPEC-led cuts

By Karolin Schaps

LONDON (Reuters) - Oil prices fell more than 1 percent on Monday as signs of a strong recovery in U.S. drilling activity outweighed news that OPEC and non-OPEC producers were on track to meet output reduction goals set in December.

Global benchmark Brent crude prices were down 49 cents at $55 a barrel by 1441 GMT. U.S. West Texas Intermediate (WTI) crude futures traded at $52.58 a barrel, down 1.2 percent from Friday's close.

Ministers representing members of the Organization of the Petroleum Exporting Countries and non-OPEC producers said at a meeting in Vienna on Sunday that of almost 1.8 million barrels per day (bpd) they had agreed to be taken out of the market, 1.5 million bpd had already gone.

"A lot of this is already priced in and the U.S. rig count keeps rising and gathering pace," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.

U.S. drillers added the most rigs in nearly four years last week, data from energy services company Baker Hughes showed on Friday.

This extends an eight-month drilling recovery, suggesting that U.S. production will continue to rise strongly just as other producers are cutting output.

"Baker Hughes said that 35 new rigs were activated last week, fuelling fears of a significant rise in U.S. production, which would offset the reduction by OPEC - and making a mockery of the Saudis' claim that they had managed to break the U.S. shale drillers," said Ashley Kelty, research analyst at Cenkos Securities.

U.S. oil production has risen by more than 6 percent since mid-2016, though it remains 7 percent below the 2015 peak. It is back to levels of late 2014, when strong U.S. crude output contributed to a crash in oil prices.

Yet there was bullish news from Libya, where an electrical fault at the Sarir oil field has resulted in a 60,000 bpd cut in production, the head of the National Oil Corp said in London.

Oil market speculators added to bullish bets last week, showing increased optimism about higher prices.

Equatorial Guinea, a signatory of the production cut deal, said on Monday that it had made an application to become OPEC's 14th member.

(Additional reporting by Naveen Thukral and Henning Gloystein in Singapore; Editing by David Evans and David Goodman)