Investing.com - Oil prices turned lower on Monday, retreating from their best level in two months, as rising drilling activity in the United States pointed to further increases in shale output, underlining concerns about a return of oversupply.
U.S. West Texas Intermediate (WTI) crude futures shed 21 cents, or 0.3%, to $65.67 a barrel by 5:30AM ET (0930GMT).
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., dipped 15 cents, or roughly 0.2%, to $69.70 a barrel.
Both benchmarks reached their strongest level since Jan. 25 earlier in the session, as the prospect of an extension to OPEC-led production cuts into next year provided support.
OPEC, along with some non-OPEC members led by Russia, have been restraining production by 1.8 million barrels per day (bpd) to curb the market of excess supply. The arrangement, which was adopted last winter, expires at the end of 2018.
However, analysts and traders have recently warned that booming U.S. shale oil production could potentially derail OPEC's effort to end a supply glut.
The number of oil drilling rigs rose by four to 804 last week, General Electric (NYSE:GE)'s Baker Hughes energy services firm said in its closely followed report on Friday.
The U.S. rig count, an early indicator of future output, is much higher than a year ago as energy companies have continued to boost spending since mid-2016 when crude prices began recovering from a two-year crash.
U.S. oil production, driven by shale extraction, rose to an all-time high of 10.40 million barrels per day (bpd) last week, staying above Saudi Arabia's output levels and within reach of Russia, the world's biggest crude producer.
In other energy trading, gasoline futures slipped 0.2% to $2.038 a gallon, while heating oil held steady at $2.022 a gallon.
Natural gas futures ticked down 1.1 cents, or 0.4%, to $2.623 per million British thermal units.