Oil tumbles nearly 4% as OPEC oil output rose in May

Commodities & Futures
© Reuters.  Crude prices sink on supply glut worries© Reuters. Crude prices sink on supply glut worries

Investing.com – U.S. oil tumbled nearly 4% on Wednesday, as a showed that OPEC oil output rose in May, the first monthly increase this year.

futures for July delivery were down 3.77% at $ 47.79 a barrel, while on the ICE Futures Exchange in London, the August contract lost 3.75% to $ 50.28 a barrel.

Higher supply from two OPEC states exempt from a production-cutting deal, Nigeria and Libya, offset improved compliance with the accord by others.

The data added to concerns over a global supply glut as U.S. shale oil drilling continues to climb.

The worries come amid continued uncertainty over whether the recent agreement to extend production cuts will actually manage to reduce global output.

OPEC and non-OPEC members agreed to extend production cuts for a period of nine months until March last week, but kept the levels at the 1.8 million barrels per day agreed in November last year, against expectations that the oil cartel was set to announce deeper production cuts.

As part of the agreement, Nigeria and Libya will remain exempt from making cuts while Iran would be allowed to retain the right to increase production to the same reference level, around 3.797 million barrels a day, agreed in November last year.

Investors also prepared Wednesday for U.S. stockpile data from the American Petroleum Institute out later in the session. The report is released one day later than usual due to the Memorial Day holiday on Monday.

Official crude inventories from the will also be published one day later than normal on Thursday.

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