Global oversupply: Oil prices hit seven-month lows
Oil prices fell to seven-month lows on Tuesday after news of increases in supply by several key producers, a trend that has undermined attempts by OPEC and others to support the market through reduced output.
Benchmark Brent LCOc1 dropped $1.29 to a low of $45.62 a barrel, its weakest since Nov. 15, two weeks before OPEC and other producers agreed to cut output by 1.8 million barrels per day (bpd) for six months from January. Brent was trading around $45.81, down $1.10, by 1225 GMT.
The U.S. crude futures contract for July CLc1, due to expire later on Tuesday, fell $1.27 to $42.93, its lowest since Nov. 14, before recovering to around $43.10.
Both benchmarks are down more than 15 percent since late May when the Organization of the Petroleum Exporting Countries, Russia and other producers extended limits on output until the end of March 2018.
OPEC supplies jumped in May as output recovered in Libya and Nigeria, both exempt from the production reduction agreement.
Libya’s oil production rose more than 50,000 bpd to 885,000 bpd after the state oil company settled a dispute with Germany’s Wintershall, a Libyan source told Reuters.
Nigerian oil supply is also rising. Exports of Nigeria’s Bonny Light crude are set to reach 226,000 bpd in August, up from 164,000 bpd in July, loading programs show.
U.S. oil production has been rising quickly this year, feeding the global glut. Data on Friday showed a record 22nd consecutive week of increases in U.S. oil drilling rigs.
Saudi Energy Minister Khalid al-Falih said the oil market is heading in the right direction and just needs time to rebalance, the London-based newspaper Asharq al-Awsat reported on Monday.
Source : Reuters