Crude prices tumble amid fresh supply glut concerns
U.S. oil tumbled on Wednesday, as an increase in Libyan production sparked fresh concerns over a global supply glut despite the extension of OPEC-let output cuts.
U.S. crude futures for July delivery were down 1.93% at $48.69 a barrel, the lowest since May 26.
On the ICE Futures Exchange in London, the July Brent contract lost 2.03% to $51.16 a barrel.
Crude prices tumbled after Libya’s National Oil Corporation said on Monday that oil production is expected to rise to 800,000 barrels per day (bpd) this week.
The data added to concerns over a global supply glut as U.S. shale oil drilling continues to climb.
The concerns come amid continued uncertainty over whether the recent OPEC agreement to extend production cuts will actually manage to reduce global output.
OPEC and non-OPEC members agreed to extend production cuts for a period of nine months until March last week, but stuck to production cuts of 1.8 million bpd agreed in November last year, against expectations that the oil cartel was set to announce deeper production cuts.
As part of the agreement, Nigeria and Libya will remain exempt from making cuts while Iran would be allowed to retain the right to increase production to the same reference level, around 3.797 million barrels a day, agreed in November last year.