Oil fell after its biggest monthly decline in a year as U.S. producers increased drilling and crude and fuel stockpiles remained at the highest seasonal level in at least two decades.
Futures slipped 1 percent in New York, having lost 14 percent in July. Drillers boosted the number of active rigs for a fifth week, the longest run of gains since last August, according to data from Baker Hughes Inc. Libya has reopened four oil ports after the resolution of a pay dispute with guards, according to a statement from the Petroleum Facilities Guard.
Oil has slipped about 19 percent from its recent peak in early June, skirting a bear market and ending a recovery that saw prices almost double from a 12-year low in February. The persistence of the supply overhang is upsetting industry expectations, with producers including BP Plc, Royal Dutch Shell Plc and Exxon Mobil Corp. reporting second-quarter earnings last week that were worse than estimated.
“The hope for a clear re-balancing may have to wait a couple more months, since oil’s drain is clogged in the meantime,” analysts at Barclays Plc including Miswin Mahesh in London said in a report. “Demand growth remains lackluster and has not made significant inroads into the inventory overhang.”
West Texas Intermediate for September delivery was at $41.20 a barrel on the New York Mercantile Exchange, down 41 cents, at 12:57 p.m. London time. The contract rose 46 cents to $41.60 on Friday as a weakening dollar bolstered investor appetite for commodities, snapping an 8.5 percent decline over six sessions. Total volume traded was about 10 percent below the 100-day average. Prices fell 5.9 percent last week.
Brent for October settlement was 43 cents lower at $43.10 a barrel on the London-based ICE Futures Europe exchange. The September contract expired Friday after falling 24 cents to $42.46, capping a nearly 15 percent drop for the month. The global benchmark traded at a premium of $1.15 to WTI for October.
For a story on slowing seasonal demand in the U.S., click here.
The U.S. oil drilling rig count climbed by 3 to 374, the highest level since March, Baker Hughes said Friday. The nation’s crude inventories rose to 521.1 million barrels through July 22, keeping supplies more than 100 million barrels above the five-year average, according to the Energy Information Administration.