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Reuters survey last week showed oil output by the Organization
of the Petroleum Exporting Countries (OPEC) reached the highest
monthly level in recent history in July.
Saudi Arabia and other key members are showing no sign of
wavering in their focus on defending market share instead of
prices, which have fallen 9 percent this year.
The lack of a plan by OPEC to accommodate the return of more
Iranian oil further fueled supply worries. Iran expects to raise
output by 500,000 barrels per day (bpd) as soon as sanctions are
lifted and by a million bpd within months, its Oil Minister
Bijan Zanganeh has said.
"The market seems to again focus on the supply situation ... one
of the difficulties is that Iran may be coming back and there is
no obvious sign that OPEC will make room for them," Ric Spooner,
chief market analyst at CMC Markets in Sydney said.
Brent crude oil fell $1.10 to $51.11 a barrel by 1055 GMT,
having touched a low of $50.85 earlier in the day, its weakest
since Jan. 30.
The price has lost nearly 20 percent so far in the third
quarter, which would make this the biggest slide for the three
months from July to September since 2008.
U.S. crude <CLc1> fell 71 cents to $46.41 after hitting the
lowest in four months at $46.35.
Growth in Chinese manufacturing activity unexpectedly stalled in
July as demand at home and abroad weakened,
an official survey showed on Saturday, adding to concern about
the economy stemming from this quarter's 15-percent drop in
Chinese stock markets.
Hedge funds and other speculators have slashed their bullish
exposure to U.S. crude, or WTI, to the lowest in nearly five
years, trade data showed on Friday, as local drilers continue to
add rigs and pump at full throttle despite a global oil glut.
[RIG/U]
"The Reuters survey on OPEC production is bearish, rig count is
bearish ... the dollar is a touch stronger and the Chinese stock
market is also down," said PVM Associates analyst Tamas Vargas.
Vargas added he thought it more likely that Brent would trade
closer to $40 by the end of the year than to $70, because of how
quickly growth of supply is outpacing that of demand.
(Additional reporting by Florence Tan in Singapore; editing by
Susan Thomas)
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