US West Texas Intermediate futures were at $52.41 a barrel, down 22 cents from their previous settlement, and WTI is down almost 3% since its January peak.

 

The falls reflect a sentiment that efforts led by Opec to cut output by almost 1.8 million barrels per day  in order to end overproduction were not big enough to offset rising US drilling.

 

US investment bank Jefferies said that while "Opec adherence to production targets has been strong", growth in US shale oil production was undermining Opec's efforts to balance global oil markets by bringing production levels in line with consumption.

 

"Higher prices will inevitably lead to growth in US production, and activity levels are already picking up," Jefferies said.

 

As a result, the bank said it is "not inclined to change our Brent price forecast - $57.75 per barrel in 2017, $71.75 per barrel in 2018".

 

Following months of increased drilling, US oil production has risen by 6.3% since July last year to almost 9 million bpd, according to data from the US Energy Information Administration.

 

Goldman Sachs estimates that year-on-year US oil "production will rise by 290,000 bpd in 2017" if a backlog on rigs that are still to become operational is accounted for.

 

With the differing outlook between global oil markets and that in the US, traders said a renewed focus on the spread between Brent and WTI futures has emerged.

 

The Brent premium over WTI for March delivery is currently over $2.7 per barrel, reflecting a tighter global market as Opec's cuts bite and a more over-supplied US as drilling continues to rise.

 

Yet by November this year, this Brent premium is down to just over $1 a barrel.

 

"You've already seen US crude coming into Asia and Europe, as traders take advantage of arbitrage between the U.S. and the rest of the world," one crude trader in Singapore said. "But at some stage, that exported U.S. crude will get priced into the global market and out of the American one, bringing down the spread between Brent and WTI."