Oil slid back towards multi-month lows on Thursday, after a brief recovery early in the session, as traders warily eyed a glut of physical supply that has persisted despite OPEC-led efforts to balance the market.
Brent crude futures were down 15 cents at $44.67 a barrel at 0850 GMT, after spending much of the Asian trading day in positive territory. They fell 2.6 per cent in the previous session to their lowest since November.
US crude futures were down 14 cents at $42.39 a barrel, after also spending much of the day trading higher. On Wednesday, they touched their lowest intraday level since August 2016.
Since peaking in late February, crude has dropped around 20 per cent, erasing gains at the end of the year in the wake of the initial OPEC-led production cut.
The Organization of the Petroleum Exporting Countries and other producers agreed to reduce output by 1.8 million barrels per day (bpd) from January for six months, and had last month extended the deal for a further nine months.
But oversupply has persisted, particularly with output rising in Libya and Nigeria, which were exempt from the cuts due to unrest that had limited their output.
Nigeria's crude oil exports are set to exceed 2 million bpd in August, the highest level planned for 17 months.
“This is a pretty concerning time for a lot of producers," said Michael Burns, oil and gas partner at law firm Ashurst.
“The question is whether OPEC will respond with further cuts or whether it needs to look again at its macro strategy for addressing low prices.”
The market largely shrugged off comments overnight from Iran's oil minister that members of OPEC are considering deeper cuts in production.
US stockpiles
A bigger-than-expected drop in US crude stockpiles also offered only short-lived support.
US crude inventories fell by 2.5 million barrels in the week to June 16, surpassing analyst expectations for a decrease of 2.1 million barrels, data from the U.S. Energy Information Administration released on Wednesday showed.
Gasoline stocks fell 578,000 barrels, compared with expectations for a seasonally unusual gain. But the output is still increasing in the United States, which was not part of the production agreement.
Oil stocks in Europe's Amsterdam-Rotterdam-Antwerp hub hit 64.2 million barrels in the week to June 16, the highest in a year, and some 24 per cent above the January low, according to data from industry monitor Genscape.