U.S. crude prices on Monday settled sharply lower after briefly breaking below $40 a barrel for the first time since April, weighed by a survey showing output in OPEC reached record highs last month amid the biggest addition of U.S. oil rigs in two years.
U.S. West Texas intermediate (WTI) ended 3.7 percent lower, or $1.54, at $40.06 — its lowest settlement since April 20 — after sliding as low as $39.86 just after midday.
Brent crude was down $1.34, or 3.1 percent, at $42.19 a barrel, after reaching an intraday low of $41.87.
Both benchmarks fell around 15 percent in July, with the decline being WTI’s largest monthly drop in a year.
John Kilduff, founding partner at energy hedge fund Again Capital, said sentiment has turned decidedly negative, as evidenced by a rise in short positions in WTI futures and a “complete abandonment” of speculative long positions, said .
Top OPEC exporter Saudi Arabia also kept output close to a record high, the survey found, as it met seasonally higher domestic demand and focused on maintaining market share instead of trimming supply to boost prices.
There are also signs Saudi Arabia is once again chasing market share. Saudi Aramco, the state-controlled oil company, cut its official selling price (OSP) for its benchmark Arab Light grade for September-loading cargoes by $1.30 a barrel to a discount of $1.10 to the regional marker Oman-Dubai.
U.S. oil drillers, meanwhile, added 44 rigs in July, the most in a month since April 2014, data from oil services company Baker Hughes showed.Click here for reuse options!