Oil declines below $66 as rig count rises, dollar stronger

West Texas Intermediate futures in New York fell 0.7% while Brent in London slipped 1%, earlier narrowing the  gap between the grades to as little as $3.99/bbl, the smallest in five months. The number of rigs drilling for crude in the U.S. rose to the highest since September. Iran’s oil minister said he sees $60 as a “good” price for crude.

“The news overall so far today has been bearish -- the rig count was up and Iran’s oil minister warned about too high prices,” said Giovanni Staunovo, commodity analyst at UBS Group AG.

WTI is trading near a three-year high as the U.S. dollar dropped for a seventh straight week, the longest stretch of declines since 2010. A weaker greenback typically boosts investor appetite for raw materials priced in the American currency. Still, oil’s recent surge is making more production in the U.S. and elsewhere profitable, which in turn will push supply even higher.

WTI for March delivery lost 46 cents to $65.68/bbl on the New York Mercantile Exchange at 12:57 p.m. in London. The U.S. benchmark gained $2.77 last week to close at $66.14. Total volume traded was about 41% above the 100-day average.

Brent for March settlement fell 77 cents to $69.75/bbl on the London-based ICE Futures Europe exchange. Prices climbed 2.8% last week.

Iranian Oil Minister Bijan Namdar Zanganeh said that crude at $60/bbl is “good,” and warned higher prices will encourage production of more expensive supplies such as shale, causing prices to drop again. Meanwhile Zanganeh’s Iraqi counterpart said his nation was targeting oil export capacity of 5 MMbpd from the south by the end of 2018.

American drillers last week added 12 oil rigs, the most since March, according to Baker Hughes data Friday. That may signal a further increase in U.S. crude output, which jumped to 9.88 MMbpd in the seven days to Jan. 19, the highest level in weekly data compiled by the Energy Information Administration since 1983.