Oil prices have continued to fall after declining 7% in the previous session over concerns that the market is oversupplied and investors are being unnerved by a faltering demand outlook.
Brent crude oil futures LCOc1, the international benchmark for oil prices, slipped nine cents to $65.38 a barrel, while US West Texas Intermediate (WTI) crude oil futures dropped 17 cents, or 0.3%, to stand at $55.52, Reuters reported.
Since hitting four-year highs in early October, crude prices have decreased by more than a quarter, making it one of the biggest declines since 2014.
Phillip Futures analyst Benjamin Lu was quoted by the news agency as saying: “Crude oil futures succumbed to overwhelmingly bearish pressure amidst weaker market fundamentals.”
According to the US Department of Energy’s Energy Information Administration (EIA), the crude oil production from the country’s seven major shale basins is projected to reach 7.94 million barrels per day (Mbpd) next month.
The US has become the world’s biggest oil producer, largely helped by rising onshore output that has taken overall crude production C-OUT-T-EIA to a record 11.6Mbpd.
Analysts believe that US production will exceed 12Mbpd within the first half of next year.
Vontobel Asset Management commodities head Jon Andersson said: “This will, in our view, cap any upside above $85 per barrel (for oil prices).”
The rising US production has resulted in increasing stockpiles, with analysts predicting a three-million barrel rise in commercial crude inventories ahead of an official announcement from the EIA on 14 November.
Meanwhile, Saudi Arabia announced recently that the Organization of the Petroleum Exporting Countries (OPEC) would cut supplies from next year to restrict supply and stabilise prices.
Andersson added: “OPEC and Russia are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next OPEC meeting on 6 December.”