Oil hovered around three-month lows on Monday, as rising U.S. inventories and drilling activity offset optimism over OPEC's efforts to restrict crude output. Brent crude was down 7 cents on the day, at $51.30 a barrel by 1202 GMT, having hit a session trough of $50.85, its lowest level since Nov. 30.
U.S. West Texas Intermediate crude fell 15 cents to $48.34 a barrel.
The price has fallen by more than 8 percent since last Monday, its biggest week-on-week drop in four months, and analysts said the slide may not have much further to run. "The market is bearish because sentiment has turned. The risk is still towards the downside, but we are nowhere near the precipice," PVM Oil Associates Tamas Varga said.
Goldman Sachs said in a note it remained "very confident" about commodity prices and maintained its price forecast of $57.50 a barrel for WTI in the second quarter.
U.S. drillers added oil rigs for an eighth consecutive week, Baker Hughes said on Friday, lifting spending to benefit from an earlier recovery in crude prices since the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut output. [RIG/U]
OPEC and other major oil producers including Russia reached an agreement late last year to rein in production by almost 1.8 million barrels per day (bpd) in the first half of 2017. Although OPEC states have been complying with supply curbs, led by Saudi Arabia, it has not been enough to overshadow a rise in U.S. inventories to a new high. [EIA/S]
"It will be interesting to see how OPEC rhetoric will evolve with this price correction. Is price the only consideration when it comes to the decision of extending cuts?" BNP Paribas global head of commodity strategy Harry Tchilinguirian told the Reuters Global Oil Forum. He added that OPEC's task was more difficult as it aimed to cut inventory levels rather than simply target a specific price.
Money managers cut their net long positions in U.S. crude futures and options in the week to March 7.
For the broader financial markets, the focus will be on the Federal Reserve's policy meeting later this week at which it could likely raise U.S. interest rates. "The week ahead is packed with potentially market defining releases," Michael McCarthy, chief market strategist at Sydney's CMC Markets, said. "However, the key to market performance this week is the response to the U.S. lift in rates."