Oil prices fell to three-month lows on Tuesday after OPEC reported that crude inventories in developed countries had risen above the five-year average in January despite production cuts by some of the world's largest exporters.
The Organization of the Petroleum Exporting Countries, which has reduced output even more than it had pledged last year, also said in its monthly report that U.S. shale output and other non-OPEC supply was increasing.
Brent futures LCOc1 were down 67 cents at $50.68 a barrel by 1321 GMT, after earlier touching $50.55, their lowest since Nov. 30.
|FILE PHOTO: An oil pump jack pumps oil in a field near Calgary, Alberta, Canada on July 21, 2014. REUTERS/Todd Korol/File Photo
U.S. crude CLc1 slid 82 cents to $47.58 a barrel after dropping during the session to $47.47, also the lowest since November.
Oil prices have now reversed almost all the gains notched up since OPEC said on Nov. 30 that it was cutting output.
Despite OPEC sticking to its pledge to cut, inventories have continued to rise. Weekly data due to be released on Tuesday by the American Petroleum Institute (API) is expected to show another rise in U.S. inventories, following on from last week's report that showed a bigger than expected increase.
"Right now, the direction of travel is more important than the absolute level," said Harry Tchilinguirian, global head of commodity strategy at BNP Paribas, citing concerns that OPEC-led cuts lasting from January to June had not halted the accumulation of inventory.
OPEC has said its supply cuts aim to stabilize prices and draw down global inventories. Investors are now looking for indications that OPEC will extend its reductions beyond June.
Saudi ally Kuwait said on Monday it would support an extension of the global deal.
"It will speed up rebalancing of the market and will help bring prices to acceptable levels for oil-producing nations and the industry in general," the Gulf state's oil minister, Essam al-Marzouq, told the state news agency.
But Saudi Arabia, the world's biggest oil exporter, which has cut even more production than it had pledged in the OPEC deal, has yet to indicate clearly whether it is ready to extend.