Crude Oil fell about 2% Tuesday, with Brent Crude settling at 7 month lows and WTI Crude Oil at its cheapest marks since September, after increased supply from several Key producers topped high compliance by OPEC and non-OPEC Oil producers with a deal to cut global output.
Brent futures for August were down 4 cents, or 0.1%, at $47.33 a barrel by 11:39 a.m. EDT (1539 GMT), while USA crude for July was down 9 cents, or 0.2%, at $44.65 per barrel the day before the July contract expires.
Oil prices on Friday bounced up off the year's lows as some producers reduced exports and USA rig additions slowed, but the rebound was modest and crude posted its fourth weekly decline on persistent concerns about global oversupply. That flipped into full contango last week, as the U.S. Energy Information Administration unexpectedly said crude inventories rose 3.3 million barrels.
The current price of oil is the weakest since shortly before OPEC agreed in late-November 2016 to collectively cut production by 1.8 million barrels per day for six months.
American production climbed to 9.33 million barrels a day through June 9, near the highest since August 2015.
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"For total non-OPEC production, we expect production to grow by 700,000 barrels per day (bbl/d) this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply". Libya is producing the most oil in four years after a deal with Wintershall AG enabled at least two fields to resume production. The global benchmark crude traded at a premium of US$2.48 to August WTI.
"People are getting a little tired waiting for the production cuts to have effect", Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone.
The last time non-OPEC supply growth exceeded the increase in demand was 2014, when oil prices slumped 46 percent.
Investment bank Goldman Sachs said if the United States rig count holds, fourth-quarter domestic oil production would rise 770,000 bpd from the same period previous year in the Permian, Eagle Ford, Bakken and Niobrara shale oilfields. Late last week, data showed the number of US oil-drilling rigs increased for the twenty-second consecutive week, a record.