Oil hits 7-month lows

Oil prices edge up after two-day losses

Oil prices edge up after two-day losses

Nigeria also expanded production of its benchmark Bonny Light crude oil, which is now set to reach 62,000 barrels per day late this summer.

Brent LCOc1 ended 89 cents lower at $46.02 a barrel, its lowest settlement since November 15, two weeks before the Organization of the Petroleum Exporting Countries and other producers agreed to cut output by 1.8 million barrels per day (bpd) for six months from January.

US West Texas Intermediate crude futures were down 1 cent at $44.19 a barrel. Shorts jumped by 32 percent, the most since May 9, while longs rose by 1.4 percent. The massive supply glut is once again sending crude oil prices into a tailspin.

Various energy-monitoring bodies, such as the International Energy Agency, of late have projected US crude output will continue rising through next year-increases which stands to negate the bulk of the ongoing OPEC-led cuts.

In May, OPEC and 11 other major producers, including Russian Federation, agreed to extend their deal to curb production until April 1.

Saudi Energy Minister Khalid al-Falih said the oil market is heading in the right direction, but still needs time to rebalance, the London-based newspaper Asharq al-Awsat reported on Monday.

US crude inventories probably shrank by 1,2 million barrels last week, according to a Bloomberg survey before Energy Information Administration data Wednesday.

That deal helped Brent climb back above $50 per barrel from lows below $30 witnessed in January 2016 - contributing to higher profits for many oil companies while motorists faced growing fuel bills. USA drillers targeting crude added rigs for a 22nd straight week, the longest stretch in three decades, according to data Friday from Baker Hughes Inc.

Generally, supply and demand have been the most important considerations. As the EIA points out, "U.S. tight oil production is relatively responsive to changes in oil price, and given an estimated six-month lag between a change in oil prices and realized production, higher crude oil prices in mid-2017 have the potential to raise US production in 2018". The problem is the deal excluded Libya and Nigeria, two countries racing to ramp up output after periods of unrest.

Nigerian oil supply is also rising.

Libya, which is exempt from the output-cut accord led by the Organization of the Petroleum Exporting Countries, has ramped up production to 900,000 barrels a day, adding further pressure on the market that is awash with surplus.

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