Oil dropped to a two-month low after U.S. producers deployed the most rigs since April, signaling that output losses that trimmed a global glut may slow.

Futures fell as much as 1.9 percent in New York to the lowest level since May 11. Rigs targeting oil in the U.S. rose by 10 to 351 last week, the highest since April 15, Baker Hughes Inc. said on its website. Money managers cut net long wagers on West Texas Intermediate to the lowest since March in the week ended July 5, Commodity Futures Trading Commission data show.

Oil has slipped from about $50 a barrel to below $45 in the last month as a rally spurred by supply disruptions in Nigeria and Canada and falling U.S. output lost momentum. Still, prices are up 70 percent from a 12-year low in February, a recovery that’s prompted American producers to begin returning drilling rigs to service. Supply risks remain, with renewed conflict in South Sudan.

“It’s easy to blame the rig count for today’s price drop,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “But there’s a bunch of factors at work, such as weakening product margins, demand concerns and the return of disrupted supply from Canada and Nigeria. This all has the potential to cause speculators to cut long positions in crude.”

WTI crude for August delivery fell as much as 88 cents to $44.53 a barrel on the New York Mercantile Exchange and traded at $45.08 at 1:09 p.m. London time. Prices climbed 27 cents to settle at $45.41 on Friday. Total volume traded was about 3 percent above the 100-day average.

Rig Count

Brent for September settlement fell as much as 86 cents, or 1.8 percent, to $45.90 a barrel on the London-based ICE Futures Europe exchange. The contract advanced 0.8 percent to $46.76 a barrel on Friday. The global benchmark crude traded at a 62-cent premium to WTI for September delivery.

While U.S. production fell to the lowest since May 2014 at 8.43 million barrels a day in the week ended July 1, crude inventories remain at the highest seasonal level in at least a decade. The number of active oil rigs in the U.S. has increased in five of the last six weeks, according to Baker Hughes. The count is still down by more than 1,000 from the beginning of last year.

Hedge funds’ net-long position in WTI fell by 9,931 futures and options combined to 169,499, the sixth decline in seven weeks, CFTC data showed. Shorts, or bets on falling prices, increased 8.4 percent, while longs decreased 0.3 percent. Speculators cut their net-long position in Brent in the week to July 5 by 14,787 contracts to 312,270, data from ICE Futures Europe showed on Monday.

Two Chinese peace keepers were killed in South Sudan’s capital as the deaths of hundreds of people over the weekend raise the specter of the oil-producing African nation’s return to all-out civil war. The country pumped 148,000 barrels a day last year, according to BP Plc.