Despite holidays in China, the U.S. and the United Kingdom, oil prices fell on Monday due to continued drilling in the U.S. which has continually undermined OPEC’s attempts to curb production and to stabilize oil prices. Last week the Organization of Petroleum Exporting Countries and some of its allies agreed to extend their production cut through the first quarter of 2018 by approximately 1.8 million barrels per day. While the agreement was largely viewed as a victory for OPEC, investors were concerned that the measures will not be enough, and the announcement was met with a heavy sell-off.

Brent crude futures were down 0.31% as of 7:03 a.m. GMT on Monday, trading at $51.99 per barrel.U.S. WTI futures were down 0.34 percent to $49.63 per barrel. U.S. drillers have added rigs for 19 consecutive weeks to 722, the highest amount since April 2015.  Almost all the recent U.S. output increases have been onshore.  

The success of OPEC’s cuts relies heavily on U.S. production which has increased 10 percent since mid-2016 in direct contradiction to OPEC’s efforts.  

Merkel Reacts Strongly to NATO Meetings

German Chancellor Angela Merkel said on Sunday that Europe cannot completely rely on its allies after difficult NATO and G7 meetings last week. Though she didn’t mention U.S. President Donald Trump by name, she publicly criticized major NATO allies and refused to support a global climate change accord.“…We have to know that we must fight for our future on our own, for our destiny as Europeans,” Merkel said.  

The euro was down 0.2 percent on Monday morning in thin holiday trading. The euro hit a 6-month high of $1.1268 last week on continued optimism from the French election, but it wasn’t able to break substantially higher. The British pound was a touch higher on Monday morning, trading at $1.2828 after falling more than 1 percent on Friday.