Oil has slipped this morning as prices come under pressure from an oversupplied fuel market.
Brent crude futures, the global benchmark, were trading down 0.84 per cent at $49.70 a barrel at the time of publishing. According to data from Reuters, that's nearly eight per cent below its open on 25 May, the day the Organisation of the Petroleum Exporting Countries (Opec) and other producing nations agreed to extend oil output cuts through the first quarter of 2018.
The US benchmark, West Texas Intermediate (WTI), was down 0.81 per cent at $47.80 a barrel.
"Oil prices have been generally falling ever since that Opec meeting on 25 May. Disappointed that the oil cartel and Russia could not come up with a bolder plan to reduce the global crude surplus, market participants have been selling into every bounce since," said Fawad Razaqzada, analyst at Forex.
While Opec works to bring the market back into balance with its agreement to cut output by 1.8m barrels per day (bpd), production in the US has been rocketing.
According to the Energy Information Administration (EIA), US crude production averaged around 9m bpd in the first quarter, up nearly 200,000 bpd from the previous quarter, and it is expected to reach a record 10m bpd next year.
However, last night's data from the American Petroleum Institute said US inventories fell by 4.6m barrels last week, beating analysts' expectations. Official data from the EIA will be released later today, and analysts are expecting stocks to fall.
"US oil stocks have actually fallen for several weeks now, suggesting the glut may be falling after all. Any further sharp reductions in US stocks could put a floor under oil prices in the short-term," Razaqzada said.