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, reports Reuters.
Brent was trading around $45.81, down $1.10, by 1330 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.
“At the moment sentiment is bearish and traders seem happy to keep selling into every rally,” said Fawad Razaqzada, a financial markets technical analyst at Forex.com.
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.
“The increasing August export program in Nigeria and the jump in Libyan oil output should pressure oil prices further in the short term,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates.