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Oil Prices Fall Another 3% as Libya, Nigeria Output Rise

June 20, 2017 at 16:48 by Andrew Moran

Oil futures are crashing once again on Tuesday as Libya and Nigeria supplies are set to rise. With oil prices plummeting to seven-month lows, investors are concerned that the global supply glut will intensify, even as the Organization of the Petroleum Exporting Countries (OPEC) extends its prediction freeze of 1.8 million barrels per day (bpd) by another nine months.

July West Texas Intermediate (WTI) futures tumbled $1.15, or 2.60%, to $43.05 per barrel at 16:33 GMT on Tuesday on the New York Mercantile Exchange. US crude prices are trading at their lowest levels since November, and some reports suggest that the August futures contract could be in bear market territory.

Brent, the international benchmark for oil prices, is also plunging on the second trading session of the week. August Brent crude futures slumped $1.06, or 2.22%, to $45.87 a barrel on London’s ICE Futures exchange. Brent, too, is trading at a seven-month low.

Year-to-date, US crude prices have cratered nearly 25%, while Brent crude prices have dropped 22%.

New reports show that OPEC supplies rose in May because production had recovered in Libya and Nigeria, two nations that are not a part of the OPEC agreement. Libya’s oil output climbed more than 50,000 bpd to 885,000 bpd last month, while Nigeria’s production increased by 62,000 bpd to 226,000 bpd. These figures are contributing to the oversupply in international markets.

Despite declining prices, US oil production is not slowing down one bit. It was reported on Friday that the number of US oil drilling rigs increased for the 22nd straight week. US oil output has spiked more than 10% over the last 12 months, and industry experts say that US oil firms require between $40 and $45 per barrel to break even.

The much-anticipated US Energy Information Administration (EIA) weekly inventory report will be released on Wednesday.

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