Oil prices have collapsed with the global benchmark trading below $45 per barrel despite recently agreed plans by oil producing nations to cut supply and shore up the value of the black stuff.
International benchmark Brent crude fell to as low as $44.35 a barrel this evening, its lowest value so far this year.
Libya and Nigeria, both of which are exempt from cuts announced last month by Opec, have announced increases in supply, raising fears of excess capacity. Meanwhile concern remains among traders about the impact of rising US shale production.
The US Energy Information Administration (EIA) today said crude inventories dropped by 2.7m barrels in the past week, which exceeded analyst expectations but not enough to support prices.
At the end of May, nations from the Opec cartel agreed to extend production cuts until March 2018. The cuts were also agreed to be shared with other non-Opec oil producing nations.
Compliance levels with the proposed cuts were at their highest levels since last year in the wake of the agreement.
"The lack of a positive response in oil prices clearly suggests market participants are not convinced that the Opec's efforts will help shore up prices in a meaningful way in the short-term as shale supply continues to rise in the US," Fawad Razaqzada, a market analyst at futures brokerage Forex.com told Reuters.
"Unless we see a marked reduction in crude stockpiles, the possibility of further short term falls in the price of oil cannot be ruled out."
And a research note from BMI highlighted some countries had increased supply prior to the latest Opec agreement.
The note said: "A number of producers - notably Iraq, Saudi Arabia and Russia - aggressively ramped up output in the run up to the deal, fast-tracking projects, expanding drilling programmes and deploying spare capacity."