Reuters

(Reuters)

U.S. Crude Breaks Below $40 as Oil Slumps on Glut Worry

Markets Reuters

U.S. crude tumbled below $40 per barrel for the first time since April as oil prices fell nearly 4 percent on Monday on heightened worries of an oil glut after a survey suggested OPEC output reached record highs last month.

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A Reuters survey on Friday found that output from the Organization of the Petroleum Exporting Countries likely rose in July to its highest in recent history as Iraq pumped more and Nigeria squeezed out additional crude exports despite militant attacks on oil installations.

Data on Friday also showed the United States added 44 new oil drilling rigs in July, the most for a month in two years, intensifying concerns that global production could once again get to unmanageable levels like in 2014-2015.

U.S. West Texas intermediate (WTI) crude plumbed $39.86, its lowest since April 20, and by 12:34 p.m. EDT (1634 GMT), was trading $1.51, or 3.6 percent, lower at $40.09.

Brent crude was down $1.43, or 3.3 percent, at $42.10 a barrel, after a session low at $41.87.

"It's stop-loss technical selling combined with sheer liquidation by those fearing we'll soon swimming in oil again," said Phil Davis, trader at PSW Investments in San Diego, California. "We've had crude builds during the summer, when we were supposed to be having runaway draws from record driving." (By Barani Krishnan; Additional reporting by Nina Chestney Henning Gloystein; Editing by Marguerita Choy and Steve Orlofsky)

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