The global oversupply of oil has been easing but with huge amounts of crude being held in tanks and tankers on land and water, the rebalancing has taken longer than many expected.
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At about 0300 GMT (1000 Malaysian time), U.S. benchmark West Texas Intermediate was down six cents at US$44.13 (RM180) a barrel and Brent was also six cents lower at US$45.63.
A buildup in oil products stockpiles has helped drag prices below $45 a barrel. The benchmark contract on Friday hit $45.17, the lowest since May 11.
However, the increase in production adds to an already painful oversupply crisis.
“Market sentiment is gloomy”, according to Germany-based Commerzbank.
Gupta said media reports of increased production from Iraq have also added to market pressure.
Barclays said weak economic growth had hurt the sector with global oil demand in the third quarter of 2016 expanding at less than a third of the rate compared to the same period a year earlier. It pointed to resilient USA supply, falling demand for transport fuels, and oversupply by refiners, particularly in gasoline.
On Friday, industry group Baker Hughes reported that the USA oil rig count climbed by 14 to 371, marking a fourth straight weekly increase. Canada is the largest supplier of crude to the US. Gasoline consumption hit monthly highs in July, increasing the demand for crude in Iranian refineries.
While US production has been falling, crude inventories are at 519.5 million barrels, historically high for this time of year, according to the Energy Information Administration (EIA).
At the G20 meeting in China which concluded over the weekend, the world’s biggest economies agreed to work together to support global growth and share the benefits of trade in a more productive manner, after focusing on the impact of Britain’s exit from Europe and fears of rising protectionism.
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Investors this week will be keeping a close eye on two major central banks-the Bank of Japan and the U.S. Federal Reserve-for their decisions on interest rates and outlooks on their respective countries. US crude production has halted its slide, increasing for a second week through July 15, according to data from the Energy Information Administration.
