NEW YORK: Oil prices tumbled on Tuesday after reports of swelling inventories and forecasts that record U.S. and Russian output will hit a market in which demand might weaken if global growth deteriorates as many expect.
U.S. crude oil fell $2.35, or 4.7 percent, to trade at $47.53 a barrel by 12:55 p.m. EST (1755 GMT). The session low was $46.97, its weakest since September 2017.
Global benchmark Brent lost $2.19, or 3.7 percent, to trade at $57.42 a barrel. Earlier in the session, Brent hit a 14-month low of $56.86.
World stock markets inched higher as investors looked ahead to whether the U.S. Federal Reserve will be able to raise interest rates much further. Equity markets have had steep declines over the last two months.
Investor confidence is deteriorating, with more fund managers expecting global growth to weaken over the next 12 months, the worst outlook in a decade, Bank of America Merrill Lynch's December investor survey showed.
"There was a flood of supply side news yesterday which, in combination with the demand destruction that the stock market slide implied, got us below $50 (a barrel for U.S. crude), and that gave us a strong sell signal," said Bob Yawger, director of futures with Mizuho in New York.
Britain's largest oilfield restarted, increasing supply, the U.S. government said output from shale would top 8 million barrels per day this year, and data suggested U.S. crude inventories would rise this week.
Both oil benchmarks have slid more than 30 percent since early October due to swelling global inventories. Volumes were low on Tuesday heading into the holiday season, and ahead of expiry for the front-month U.S. crude futures contract.
The Organization of the Petroleum Exporting Countries and other oil producers agreed this month to curb production by 1.2 million barrels per day (bpd), equivalent to more than 1 percent of global demand, in an attempt to drain tanks and boost prices.
But the cuts will not happen until next month and production has been at or near record highs in the United States, Russia and Saudi Arabia.
Russian oil output hit a record 11.42 million bpd this month, an industry source told Reuters.
Oil production from seven major U.S. shale basins is by the year-end expected to surpass 8 million bpd for the first time, the U.S. Energy Information Administration said.
Inventories at the U.S. storage hub of Cushing, Oklahoma, delivery point for the oil futures contract, rose more than 1 million barrels from Dec. 11 to 14, traders said, citing data from market intelligence firm Genscape. U.S. trade group the American Petroleum Institute is expected to release weekly inventory data at 4:30 p.m. EST on Tuesday.
Britain's largest oilfield, Buzzard, restarted after repairs on pipe work, a spokesman for operator Nexen said on Monday. Buzzard produces about 150,000 barrels per day and is the largest contributor to the Forties pipeline that brings oil to shore from more than 50 fields.
The United States has surpassed Russia and Saudi Arabia as the world's biggest oil producer, with total crude output climbing to a record 11.7 million bpd.
The market shrugged off news early on Tuesday that Libya's state oil firm had declared force majeure on operations at the country's largest oilfield, El Sharara, a week after it announced a contractual waiver on exports from the field following its seizure by protesters.
The 315,000 barrels-a-day field, located in the south of the North African OPEC member country, was taken over on Dec. 8 by groups of tribesmen, armed protesters and state guards demanding salary payments and development funds.