Despite the global cuts in crude oil supply to the worldwide market by the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members, crude oil prices yesterday dropped to seven-week low as production increases from key producers undermined the efforts of the cartel to reduce the glut in the oil market.
Futures were little changed in NY after capping the longest run of weekly declines since August 2015.
"In my opinion, market fundamentals are going in the right direction, but in light of the large surplus in stockpiles over the past years, the cut needs time to take effect", he told the newspaper, referring to a global deal to curb oil production. Oil prices continued to slump during Monday trading after markets consolidated the performance of crude oil last week along with the sentiments regarding the rising oil production.
Some believed that would have caused the price of oil to rise with the anticipation that supplies would be reduced.
The WTI crude futures contract for July fell by 1.81% ($0.8) to $42.93, its lowest since November 14.
According to Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London,"presently in libya there found a support in light of recent supply side development, considering further restoringg of production in Libya, further increase in the US rig count and reports of floating storage building up again".
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And a research note from BMI highlighted some countries had increased supply prior to the latest Opec agreement. American crude production has expanded to 9.33 MMbpd through June 9, near the highest since August 2015, EIA data show.
This is a trend that has undermined efforts by OPEC to assist the market while cut down output.
The price of oil has fallen to the lowest point in seven months amid concerns of an oversupply.
Saudi Energy Minister Khalid al-Falih said the oil market needed time to rebalance, pointing to a draw of around 50 million barrels from floating storage and a drop in industrial nations' onshore storage compared to July previous year.
US crude oil production is projected to increase through 2018, averaging 9.3 million b/d in 2017 and 10.0 million b/d in 2018.
The report from Baker Hughes shows that the numbers of operating rigs in the United States rose for the 22nd consecutive week.
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