Investing.com - Oil prices erased earlier gains on Tuesday, with West Texas Intermediate prices falling below the $37-level for the first time in almost seven years amid ongoing jitters over a global supply glut.
Crude oil for delivery in January on the New York Mercantile Exchange tumbled 78 cents, or 2.06%, to trade at $36.88 a barrel during U.S. morning hours. It earlier fell to $36.79, a level not seen since February 2009. On Monday, Nymex futures plunged $2.32, or 5.8%.
Market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 0.1 million barrels in the week ended December 4.
U.S. oil supplies in the U.S. rose for the 10th consecutive week last week, remaining near levels not seen for this time of year in at least the last 80 years.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for January delivery slumped 60 cents, or 1.47%, to trade at $40.13 a barrel after dropping to $40.41, also the weakest level since February 2009. A day earlier, London-traded Brent sank $2.27, or 5.28%.
The Organization of the Petroleum Exporting Countries failed to agree on output targets to reduce an oil glut that has cut prices by more than 60% since June 2014. As a result, crude prices are expected to remain stubbornly low amid a glut of oversupply on global energy markets.
The 12-member group produced approximately 31.5 million barrels per day last month. Global crude production is outpacing demand following a boom in U.S. shale oil and as OPEC opted not to cut production in order to defend market share.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $3.25 a barrel, compared to $3.08 by close of trade on Monday.
Prices were also weighed as the latest trade figures out of China added to concerns over the health of the world's second-biggest economy.
Exports slumped 6.8% from a year earlier in November, worse than forecasts for a decline of 5.0%, while imports dropped 8.7%, compared to expectations for a tumble of 12.6%. That left China with a surplus of $54.1 billion last month, down from $61.6 billion in October.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.