US Crude Ends At 9-Month Lows On Global Oversupply
NEW YORK, June 20 (Reuters) - Oil fell about 2 percent on Tuesday, with Brent settling at seven-month lows and U.S. crude at its cheapest level since September, after increased supply from several key producers overshadowed high compliance by OPEC and non-OPEC oil producers with a deal to cut global output.
Brent ended 89 cents lower at $46.02 a barrel, its lowest settlement since Nov. 15, two weeks before the Organization of the Petroleum Exporting Countries and other producers agreed to cut output by 1.8 million barrels per day (bpd) for six months from January.
The U.S. crude futures contract for July, due to expire later on Tuesday, settled down 97 cents at $43.23, the lowest since Sept. 16.
Oil prices briefly pared losses in post-settlement trade after the American Petroleum Institute, an industry group, said U.S. crude stockpiles had dropped more than forecast. Prices then gave up the gains. An official government report is due at 10:30 a.m. EDT (1430 GMT) on Wednesday.
Both benchmarks were down more than 15 percent since late May, when OPEC, Russia and other producers extended limits on output until the end of March 2018.
"Given the expectation that you'll see higher production levels in several areas of the world, it's going to offset all they're taking off the market," said Gene McGillian, manager of market research at Tradition Energy.
OPEC and non-OPEC oil producers' compliance with the deal to cut output reached its highest in May since they agreed on the curbs last year, reaching 106 percent last month, a source familiar with the matter said.
OPEC supplies, however, 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 programmes show.
"The increasing August export programme 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.
"If we get bearish U.S. oil statistics this week, we could see a test of $45 on Brent," Varga said.
Ahead of weekly U.S. inventory reports, U.S. crude oil stocks were forecast to have fallen 2.1 million barrels last week, while gasoline was seen building by 400,000 barrels after last week's data showed an unexpected build that weighed heavily on the market.
"Recent data points are not encouraging," Morgan Stanley analysts said in a note to clients. "Identifiable oil inventories - both crude and product in the OECD, China and selected other non-OECD countries - increased at a rate of (about) 1 (million bpd) in Q1."
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