Oil prices fell more than 1 per cent today as an increase in US drilling countered the prospect of OPEC extending an output-reduction deal.
Investors made record cuts to bets on rising prices after strong drilling data from the United States fed concerns about the effectiveness of OPEC-led production cuts to curb a supply glut.
Benchmark Brent crude futures were down 60 cents at $51.16 a barrel at 0934 GMT. US West Texas Intermediate (WTI) crude futures were trading 71 cents lower at $48.07 a barrel.
"Speculative investors have thrown in the towel it seems. We've got record selling in the week ending March 14 and the bleeding has not stopped yet," Carsten Fritsch, senior commodities analyst at Commerzbank in Frankfurt, told Reuters.
"The continued increase in US oil rigs adds to the bearish sentiment."
US drillers added 14 oil rigs in the week to 17 March, bringing the total count up to 631, the most since September 2015, energy services firm Baker Hughes Inc said on Friday. This extends a recovery that is expected to boost shale production by the most in six-months in April.
Growing US production is playing into concerns that a global production cut deal by the Organization of Petroleum Exporting Countries and non-OPEC members is having less of an impact.
The prospect of higher output from Libya, which is exempt from the output cut deal, is adding further bearish sentiment.
Libya's National Oil Corporation (NOC) said it was confident of regaining control of two key oil ports, Es Sider and Ras Lanuf, which have a combined capacity to export 600,000 bpd.
Reacting to the oil glut, financial oil traders cut their net long US crude futures and options positions in the week to March 14, the third consecutive reduction, the US Commodity Futures Trading Commission (CFTC) said on Friday.
The reduction in net long positions was the largest on record, according to CFTC data compiled by Reuters.
"Hedge selling from producers and long-liquidation from funds is a bearish cocktail," said Ole Hansen, Saxo Bank's head of commodity strategy.