2018.05.2819:20:00UTC+00Oil Skids to Multi-Week Lows on Concerns of Increasing Supplies

Oil prices continued to decline on Monday as Saudi Arabia and Russia said they may boost supplies while U.S. output showed no indication of abating.

Brent crude futures stood at $75.32 per barrel, $1.12 lower from the prior close. The contract hit a three-week low of $74.49 earlier in the session. U.S. crude futures were at $66.47, falling $1.41, after touching a six-week low of $65.80 per barrel.

The spread between the two contracts hit $9.38 per barrel, its widest since March 2015.

Trading was subdued due to public holidays in the U.S. and United Kingdom.

The Organization of the Petroleum Exporting Countries and other producers headed by Russia started restricting 1.8 million bpd of supplies in 2017 to limit the market and drive up prices that in 2016 slid to their lowest level in over a decade at less than $30 per barrel.

Prices have surged since the beginning of the reductions in the previous year, with Brent breaking through $80 this month, prompting worries that high prices could hamper economic growth and boost inflation.

To tackle possible output shortfalls, Saudi Arabia, the de facto leader of OPEC and top producer Russia have been in talks about easing the cuts and boosting oil production by 1 million bpd, according to sources last week.

Russian Energy Minister Alexander Novak said on Saturday that a reversion to October 2016 production levels, the baseline for the present production agreement, was one option for easing curbs.

Meanwhile, surging U.S. crude production showed no indication of slowing as drillers continued to grow their search for new oilfields to exploit. U.S. energy companies added 15 rigs looking for new oil in the week ending May 25, bringing the rig count to 859, its highest since 2015, in a strong indication that American crude production will continue to rise.