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Oil prices lower as persistent oversupply fears weigh

Published 30/05/2017, 09:17
© Reuters.  Oil prices lower as persistent oversupply fears weigh
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Investing.com - Oil prices fell on Tuesday as concerns about oversupply continued to weigh, despite the American summer driving season getting underway.

U.S. West Texas Intermediate crude futures were down 32 cents, or around 0.64%, to $49.48 a barrel by 08.22 GMT, after climbing above $50 per barrel earlier.

International benchmark Brent crude futures were down 51 cents or 0.99% to $52.13 a barrel on the ICE Futures Exchange in London.

Ongoing oversupply concerns continued to pressure prices lower, analysts said.

Traders have questioned whether a decision by the Organization of the Petroleum Exporting Countries to extend a pledge to cut production by around 1.8 million barrels per day until the end of the first quarter of 2018 will be enough to reduce a massive global supply glut.

While OPEC's move had been widely expected, some analysts had hoped producers would agree to longer or deeper cuts to drain a global glut.

So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, and a relentless increase in U.S. shale oil output.

The number of active U.S. rigs drilling for oil has increased for 19 straight weeks, to 722, the highest since April 2015 and the longest run of increases ever, according to energy services firm Baker Hughes.

Prices found some support earlier after the American summer driving season got underway on the Memorial Day holiday on Monday.

The American Automobile Association has projected that 34.6 million people will drive 50 miles (80 km) or more from home during the end-of-month holiday period, most since 37.3 million in 2005.

Elsewhere on Nymex, gasoline futures for July fell to $1.6175 a gallon, while July heating oil was down 0.82% to $1.5539 a gallon.

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