Increased supply by several oil producing countries despite cautionary advice from the Organisation of the Petroleum Exporting Countries (OPEC) and others to reduce output has led to global crude oil prices falling by $1.29 to a low of $45.62 a barrel on Tuesday night.
U.S. West Texas Intermediate crude futures for July dropped 54 cents, or 1.2 percent, to settle at $44.20 per barrel, the lowest close since November 14.
US oil production has been rising quickly this year, feeding the global glut.
At that time, OPEC and other non-OPEC producers such as Russian Federation agreed to cut output by 1.8 million barrels a day for the first six months of 2017. Nigeria's crude exports are set to surpass 2 million barrels per day (bpd) in August, highest in 17 months, as the country recovers from militant attacks that crippled production in 2016.
Oil has extended its decline below US$44 a barrel to a nine-month low on concerns relentless supply gains from the U.S., as well as renewed output from Libya, is offsetting cuts by Opec and partners including Russian Federation.
Crude inventories fell 2.5 million barrels in the week to June 16, surpassing analysts' expectations for a decrease of 2.1 million barrels, as imports rose marginally by 56,000 barrels per day, the US Energy Information Administration said on Wednesday.
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However, production is rising in Nigeria and Libya, countries exempt from the deal, offsetting cuts by other OPEC members.
"Unless we see a marked reduction in crude stockpiles, the possibility of further short term falls in the price of oil can not be ruled out", he said.
Brent for August settlement was 7 cents lower at $44.75 a barrel on the London-based ICE Futures Europe exchange. Relentless drilling in US shale fields and renewed output from Libya are putting that effort in jeopardy.
On June 13, the premium (or spread) of Brent crude oil active futures to WTI crude oil active futures was $2.26 per barrel. Data on Friday showed a record 22nd consecutive week of increases in US oil rig numbers. Meanwhile, oil production rose to 9.35 million barrels a day, the highest level in nearly two years.
"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".
"The slide in oil prices seems to be unstoppable", said Julius Baer commodities research analyst Carsten Menke.
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