Oil futures fell for a third straight session Tuesday, pressured by renewed fears of a global supply glut triggered in part by reports that OPEC production rose in April, according to Bloomberg MarketWatch.
West Texas Intermediate crude for June delivery on the New York Mercantile Exchange fell $1.13, or 2.5%, to settle at $43.65 a barrel.
Brent crude oil dropped 86 cents, or 1.9%, to finish at $44.97 a barrel on London’s ICE Futures Exchange.
At least part of the slide was sparked by worries that crude’s recent rally could encourage producers, notably North American shale producers, to crank out more oil, which also is putting pressure on prices.
“Oil looks to have topped out, because we’re getting quite near to that level where we might see fracking come out again, so I think people are taking profits on that,” said Augustin Eden, research analyst at Accendo Markets.
This also means that as oil prices start to rise, fracking could become profitable again, enticing more producers to come back online and increase output in a market that is already struggling with a supply glut.
“Oil prices have also been absorbing a lot of negative news lately and completely ignoring the fact the markets remain oversupplied with U.S. crude oil inventories being at record-high levels,” said Fawad Razaqzada, a market analyst at Forex.com and City Index.
An early reading on U.S. output from the American Petroleum Institute, an industry trade group, comes late Tuesday, followed by the more closely watched U.S. Energy Information Administration, which releases its weekly inventory data Wednesday. A survey compiled by Bloomberg forecast an increase of 500,000 barrels in stockpiles last week.
Meanwhile, June natural gas jumped rose 4.4 cents, or 2.2%, to end at $2.086 per million British thermal units.