Oil prices dropped more than 3 percent on Tuesday with main crude benchmarks, Brent and WTI, trading at the lowest levels in more than a year. Forecasts of record US shale oil output triggered worries about global oversupply.
West Texas Intermediate (WTI) crude fell nearly 3.5 percent to $48.22 a barrel, its weakest since September 2017, before slightly recovering to around $48.60. Meanwhile, Brent crude oil futures crashed to their lowest in more than a year, losing over 3 percent, or $1.81, trading at $57.73 at 10.15am GMT.
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It has become the third consecutive session of losses for crude amid fears of oversupply. The latest concerns were triggered by a US energy agency report, saying that oil production from seven major American shale basins is expected to surpass 8 million barrels per day (bpd) by the end of the year.
The forecast can hamper the results of the Organization of the Petroleum Exporting Countries (OPEC) summit, where OPEC members and major oil producing countries led by Russia sealed a deal to cut production by 1.2 million bpd in a bid to boost prices. However, the agreed measures have not been implemented so far.
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“Rising US shale production levels along with a deceleration in global economic growth has threatened to offset OPEC+ efforts as markets weigh the potential of looser fundamentals,” Benjamin Lu Jiaxuan, an analyst at Singapore-based brokerage firm Phillip Futures, said as cited by media.
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