Oil prices hit
seven-month lows on global oversupply
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[June 20, 2017]
By Christopher Johnson
(Reuters) - Oil prices fell to seven-month lows on Tuesday after news of
increases in supply by several key producers, a trend which has
undermined attempts by OPEC and other producers to support the market
through reduced output.
Benchmark Brent dropped $1.06 to a low of $45.85 a barrel, its weakest
since Nov. 18, just before OPEC and other producers agreed to cut output
by 1.8 million barrels per day (bpd) for six months from January.
Brent was trading around $46.00, down 91 cents, by 1050 GMT.
The U.S. crude oil futures contract for July <CLc1>, which was due to
expire later on Tuesday, fell 98 cents to a low of $43.22, its lowest
since Nov. 14, before recovering to around $43.30.
Both benchmarks are down more than 15 percent since late May, when OPEC,
Russia and other producers extended their limits on production until the
end of March 2018.
"Recent data points are not encouraging," Morgan Stanley analysts said
in a research note. "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."
OPEC supplies jumped in May as output recovered in Libya and Nigeria,
two countries 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, industry figures show.
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Workers look at a drilling rig at the Prirazlomnoye oil field
outside the West Siberian city of Nefteyugansk, Russia, August 4,
2016. REUTERS/Sergei Karpukhin/File Photo/File Photo
Exports of Nigeria's benchmark Bonny Light crude oil are set to reach
226,000 bpd in August, up from 164,000 bpd in July, loading program
"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.
"If we get bearish U.S. oil statistics this week, we could see a test of
$45 on Brent," Varga said.
U.S. oil production has been rising quickly this year, feeding the
global glut. Data on Friday showed a record 22nd consecutive week of
increases in U.S. oil drilling rigs. [RIG/U]
But Saudi Energy Minister Khalid al-Falih said the oil market is heading
in the right direction and just needs time to rebalance, the
London-based newspaper Asharq al-Awsat reported on Monday.
(Additional reporting by Aaron Sheldrick in Tokyo; editing by Jason
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