US oil prices extended their recent declines Tuesday, with some investors still anxious about the impact of higher supply with two of the world's largest producers nearing an agreement to boost output.
US West Texas Intermediate (WTI) crude futures were at $67.36 a barrel, down 52 cents, or 0.8 percent, from their last settlement.
Saudi energy minister Khalid Al-Falih said during a CNN-hosted panel in St. Petersburg, Russia, that he was in intensive discussions with Russia and other OPEC nations to pump more oil to ease global supply concerns.
Brent and WTI have fallen by 6 per cent and 8.3 per cent respectively from peaks touched earlier in May.
Volatility - a gauge of demand for a particular option - has risen sharply for bearish sell options at around $67 a barrel that expire immediately after OPEC's meeting with its partners that will run from June 22-23.
The downward pressure on oil continued on Monday as traders considered data showing a jump in the number of United States oil rigs, indicating potential growth in U.S. production.
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USA crude production C-OUT-T-EIA has already surged by more than 27 percent in the last two years, to 10.73 million barrels per day (bpd), bringing its output ever closer to that of Russian Federation, which pumps around 11 million bpd.
"High uncertainty clouds the short-term outlook and we maintain a neutral view. Where the balance is heading going forward largely depends on political factors", Julius Baer's Norbert Ruecker said in a note. In the medium to longer term, we still see oil prices falling as indicated by the downward-sloping futures curve.
The Organization of the Petroleum Exporting Countries (OPEC) is due to meet in Vienna on June 22.
Crude oil prices extend the decline to $65.70 on Monday.
US oil production has surged by more than 20 percent in the past two years to 10.7 million bpd.
But even if Asia and Europe are keen to take more U.S. crude, the record volumes are straining export infrastructure in the United States, limiting its ability to pump and ship more oil.
"Market participants remain unsure how quickly an exit strategy can be implemented and whether it will go beyond just balancing the output drop from Venezuela", said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London. Only Russia now produces more, at around 11 million bpd.