Oil prices fell on Tuesday as global oversupply encouraged several banks to cut their forecasts for crude for this year and 2018.
Benchmark Brent crude (LCOc1) was down 15 cents at $46.73 a barrel by 1310 GMT. U.S. light, sweet crude (CLc1) was 15 cents lower at $44.25.
“The fundamental mood has taken a turn for the worse,” Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas (PA:BNPP), told Reuters Global Oil Forum.
BNP Paribas slashed its forecasts for Brent by $9 to $51 a barrel for 2017 and by $15 to $48 for 2018. Barclays (LON:BARC) also cut its 2017 and 2018 Brent forecasts to $52 a barrel for both years from $55 and $57 respectively.
Crude prices are about 18 percent below their 2017 opening levels despite a deal led by the Organization of the Petroleum Exporting Countries to cut production from January.
OPEC, along with Russia and some other major exporters, has agreed to hold production at about 1.8 million barrels per day (bpd) below levels pumped at the end of last year.
The limits will be maintained until March 2018 in an attempt to drain a global glut, but production elsewhere has risen as OPEC has held back.
U.S. oil production has jumped more than 10 percent over the last year to 9.34 million bpd. Nigeria and Libya, OPEC members exempt from production limits, have also increased output.
Without a significant fall in oil inventories or a decline in U.S. drilling and production, Goldman Sachs (NYSE:GS) said U.S. crude could drop below $40 per barrel.
OPEC members are also under pressure to increase supply to customers, particularly in Asia.
Saudi Aramco will meet customers’ full crude oil requirements in India and many other Asian countries in August, several sources with knowledge of the matter said on Tuesday.
“There is no (supply) cut” even for heavier grades such as Arab Medium and Heavy crude in August, one of the sources said.
Saudi Arabia has told OPEC it raised crude production to 10.07 million bpd in June, industry sources said, from 9.88 million in May.
This means that, based on Saudi Arabia’s own figures, June was the first month in which the kingdom’s oil production exceeded its agreed OPEC target of 10.058 million bpd since the group started cutting production on Jan. 1.