NEW YORK (Reuters) - Oil prices fell about 1 percent on Monday to a seven-month low as market players saw more signs that rising crude production in the United States, Libya and Nigeria undercut OPEC-led efforts to support the market with output curbs.
“We’re seeing more tankers used for storage and more crude from West Africa and Europe being offered into the U.S. Gulf Coast at the same time the Gulf Coast has been an exporter of light sweet crude,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
“These are all signs of an oversupplied market.”
Brent LCOc1 futures for August fell 46 cents, or 1 percent, to settle at $46.91 a barrel, their lowest since Nov. 29, the day before the Organization of the Petroleum Exporting Countries agreed to cut output for the first six months of 2017.
U.S. West Texas Intermediate crude CLc1 futures for July dropped 54 cents, or 1.2 percent, to settle at $44.20 per barrel, the lowest close since Nov. 14. The July contract will expire on Tuesday, and August will become the front month.
Both benchmarks are down more than 15 percent since late May, when producers led by OPEC extended by nine months their pledge to cut output by 1.8 million barrels per day (bpd).
There were still almost 70,000 WTI contracts for July outstanding at the end of trade on Friday, which would require delivery of about 70 million barrels of oil to Cushing, Oklahoma after Tuesday’s expiration.
“Some of the pressure on Monday is because it is hard to get rid of that many (WTI) contracts in just two days,” said Phil Davis, managing partner at PSW Investments in Woodland Park, New Jersey, noting “very few traders actually want to take physical delivery.”
Traders noted the Brent front-month contract was at the highest premium since late May over the same WTI contract WTCLc1-LCOc1.
OPEC supplies jumped in May as output recovered in Libya and Nigeria, two countries exempt from the production cut agreement.
Libya’s oil production has risen more than 50,000 bpd after the state oil company settled a dispute with Germany’s Wintershall, a Libyan source told Reuters.
Analysts said rising U.S. crude production has fed the global glut. Data on Friday showed a record 22nd consecutive week of increases in U.S. oil rigs.
Investment bank Goldman Sachs said if the U.S. rig count holds, fourth-quarter domestic oil production would rise substantially.
There are also signs of stalling demand growth in Asia, the world’s biggest oil-consuming region.
Japan’s customs-cleared crude imports fell 13.5 percent in May from a year earlier. India took in 4.2 percent less crude in May than the year before.
Additional reporting by Libby George in London and Henning Gloystein in Singapore; Editing by Louise Heavens and David Gregorio