Oil prices fall with rising global glut concerns

Still, Brent crude oil futures had risen 48 cents, or 1 percent, to $50.43 per barrel by 0713 GMT. Despite this, Brent futures are still more than 8 percent below their level on May 25, when OPEC announced it would extend its production cut into 2018.Shortly after 1 p.m. ET, the July contract for West Texas Intermediate crude, the North American benchmark, was down $2.31 to $45.88 USA a barrel.With oil production of about 620,000 barrels per day (bpd), Qatar is one of the smallest crude producers in the Organization of the Petroleum Exporting Countries, but some investors fear tension within the cartel could weaken its agreement to hold back production in order to prop up prices.Oil prices fell more than 1 percent on Monday on concerns that the cutting of ties with Qatar by top crude exporter Saudi Arabia and other Arab states could hamper a global deal to reduce oil production. That confounded forecasters who had predicted a drop of 3.5 million barrels, especially a day after preliminary data from the American Petroleum Institute indicated an even bigger drop.Focus is likely to shift to US inventories ahead of government data Wednesday.Marex Spectron said that the demand outlook for coming weeks from refineries was strong, also supporting prices.Oil prices were supported by tensions surrounding Qatar with some expectations that disruptions to loadings could have a significant impact in undermining shipments and support prices. The organization members and other producers, including Russian Federation, had pledged to cut output by about 1.8 million barrels per day in order to shore up oil prices. Despite the increase in crude production, USA crude inventories have decreased for eight straight weeks.”The market is still awash in oil, and it’s waiting to see more concrete signs of global oil inventories declining”, said Andy Lipow, an oil market analyst in Houston.Oil prices have declined by more than 4% since the previous week which is one of the largest weekly declines since May after data on Friday revealed that USA oil drillers are expanding to 11 more active rigs which is the twentieth weekly rise in a row.”The relentless increase in USA oil production appears to have the market anxious that the OPEC cuts will be completely nullified by the increased United States production”, said William O’Loughlin, analyst at Rivkin Securities.