Oil down 1% on continued concerns over US output

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American oil explorers idled four rigs last week after six consecutive increases in drilling, easing fears over surging shale production. The resulting fallout could drag down crude prices after a rally of more than 40 percent since June, he said.

"Employment is the key driver of oil demand, as more people at work means more commutes and, in outcome, rising road fuel use", said Norbert Ruecker, head of commodity research at Julius Baer Ltd.in Zurich. April West Texas Intermediate crude fell 68 cents, or 1.1%, to settle at $61.36 a barrel on the New York Mercantile Exchange.

That has undercut some of the enthusiasm for oil, as investors weigh increased USA supply against the likelihood that the Organization of the Petroleum Exporting Countries and non-OPEC producers will maintain supply cuts that have been in effect for more than a year. Total volume traded was about 34% below the 100-day average.

Brent crude futures were at $64.85 per barrel, down 10 cents, or 0.2 percent. The global benchmark traded at a $3.47 premium to May WTI.

In oil markets, US energy companies last week cut oil rigs for the first time in nearly two months RIG-OL-USA-BHI, with drillers cutting back four rigs, to 796, Baker Hughes energy services firm said on Friday. That followed government data showing the US added 313,000 jobs in February, the biggest increase since July 2016 and more than the median estimate of 205,000 new positions. "They continue to give market share away to the U.S". The dollar tends to have an inverse relationship with oil prices, as a weaker greenback makes dollar-denominated commodities cheaper for holders of other currencies.

The pessimistic view was echoed in money managers' short-selling position.

CNBC noted that hedge funds and money managers have pared their bullish wagers on WTI, with long positions falling last week for the first time in three weeks; meanwhile, gross short positions (bets that prices will fall) on the New York Mercantile Exchange climbed to their highest level in almost a month.