Oil hits multi-month lows on record OPEC out­put


Oil ex­tended losses to multi-month lows on Mon­day on wor­ries of over­sup­ply as OPEC pumped at record lev­els in July, while weak China data stoked con­cerns about slower growth at the world's sec­ond largest oil con­sumer. Oil out­put by the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries (OPEC) reached the high­est monthly level in re­cent history in July, a Reuters sur­vey showed, with Saudi Ara­bia and other key mem­bers show­ing no sign of wa­ver­ing in their fo­cus on de­fend­ing mar­ket share in­stead of prices.

The lack of a plan by OPEC to make room for the re­turn of more Ira­nian oil fur­ther fu­elled sup­ply wor­ries. Iran ex­pects to raise out­put by 500,000 bar­rels per day (bpd) as soon as sanc­tions are lifted and by a mil­lion bpd within months, its Oil Min­is­ter Bi­jan Zan­ganeh has said. "The mar­ket seems to again fo­cus on the sup­ply sit­u­a­tion ... one of the dif­fi­cul­ties is that Iran may be com­ing back and there is no ob­vi­ous sign that OPEC will make room for them," Ric Spooner, chief mar­ket an­a­lyst at CMC Mar­kets in Syd­ney said.

Brent fell 50 cents to $51.71 a bar­rel by 0643 GMT af­ter touch­ing an in­tra­day low of $51.50, the low­est since Feb. 2. It is on its long­est weekly los­ing streak since late 2014.

U.S. crude fell 39 cents to $46.73 a bar­rel af­ter hit­ting the low­est in four months at $46.35. Front-month prices lost 20.8 per­cent in July, the big­gest monthly drop since Oc­to­ber 2008.

Tech­ni­cal charts showed that Brent could fall fur­ther to­wards $50 in the near term while West Texas In­ter­me­di­ate (WTI) could head to lows of around $42.03 if it breaks a sup­port level at $46.40, Bar­clays an­a­lyst Lyn­nden Branigan said in a note.

Hedge funds and other spec­u­la­tors have slashed their bullish ex­po­sure to WTI to the low­est in nearly five years, trade data showed on Fri­day, as lo­cal drillers con­tinue to add rigs and pump at full throt­tle de­spite a global oil glut.

"The re­cent re­cov­ery in the oil rig count sup­ports our ex­pec­ta­tion that U.S. pro­duc­ers can and will ramp up ac­tiv­ity with WTI prices near $60/bbl, given im­proved re­turns with costs down 30 per­cent," Gold­man Sachs an­a­lysts said in a weekly rig count re­port.

"The cur­rent rig count im­plies that U.S. pro­duc­tion will se­quen­tially de­cline in 3Q15 although con­tinue to grow in 2016." Growth at China's big man­u­fac­tur­ing com­pa­nies un­ex­pect­edly stalled in July as de­mand at home and abroad weak­ened, an of­fi­cial sur­vey showed on Satur­day, adding to wor­ries from a re­cent slump in Chi­nese stock mar­kets.

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