Oil falls as OPEC production jumps

Oil is falling after OPEC increased oil production despite last month’s agreement to extend production cuts. West Texas Intermediate crude oil trades down 0.24% at $US45.89 a barrel early Tuesday.

Libya and Nigeria led the 336,100 barrels a day bump in production, as the countries are exempt from the production cuts that were announced in May. The two countries increased their production to recover reduced supplies due to political turmoil.

A report by OPEC also points to a recent increase in US oil supplies as a reason for a slide in oil prices. Last week, the number of oil rigs in the US increased for the 21st straight week last week, setting a record.

“Oil has been weighed down by the market’s impatience with the generally slow pace of the inventory drawdown globally,” the OPEC report said.

Despite the increase, OPEC still predicts a contraction of supply in 2017 and early 2018. The production cuts announced by OPEC disappointed investors last month as they were a continuation of the previous announcement and did not go any further.

WTI is down about 5.3% over the past year.

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