Oil prices declined another $2 per barrel on Tuesday, stretching further their deepest loss this year as surging Libyan shipments and informal economic data fueled fears that global oil markets were facing a glut in the near future.
Global oil prices have quickly addressed a geopolitical risk premium, which had been propelling prices upwards since April, Reuters reported.
West Texas Intermediate oil dropped below $100 as Brent declined to a low last recorded three months ago.
Libya has moved to bolster oil shipments after two terminals reopened. US crude production jumped to the highest level since 1986 in the week that ended July 4, with additional output expected as favorable summer weather is likely to bolster demand a surge in pumping from North Dakota, which is the number 2 oil producing state in the US.
“The market may have a hard time handling the surge in Libyan oil production. In a very short time the market has moved from concerns about insufficient supply to what may turn into an oversupply situation,” John Kilduff of Again Capital LLC in New York told Bloomberg by phone.
August-delivery WTI dropped $1.74 or 1.7% to $99.17 per barrel as of 11:59 am on the New York Mercantile Exchange. Contracts hit $99.01, the lowest price since May 5. The volume of all futures that changed hands was 85% higher than the average for the past 100 days at the particular time of the day.
Brent for August delivery was down $2.04 or 1.9% to $104.94 per barrel on the ICE Futures Europe exchange in London. The benchmark touched $104.39, the lowest price since April 2. The more-active futures for September settlement slid $1.71 or 1.6% to $106. Volumes of futures traded were more than 100% above the average for the past 100 days.
Brent exchanged at a $5.77 premium to WTI, from $6.07 on Monday.
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com