US prices for oil dropped less than US$ 50 per barrel on Monday, settling at the lowest level since April. The dip followed persistent concerns that global supplies of crude oil have been overwhelming the demand.
Sweet and light crude meant for delivery in August reached down to 1.5 per cent or 74 cents to US$ 50.15 per barrel on the New York Mercantile Exchange. This has been the lowest settlement after April 2 after slipping down to as low as US$ 49.85 per barrel.
The September contract, a more actively traded one, closed at 1.5 per cent or 77 cents to reach US$ 50.44 per barrel.
Brent, the global benchmark, dropped down 0.8 per cent or 45 cents to reach US$ 56.65 per barrel on ICE Futures Europe.
After dropping to a near six year low in March, the prices of oil rallied through the month of April on cues that cuts in oil drilling in the United States might result in lower production. However, oil prices have dropped over the past few weeks since output from the United States and other countries has continued to remain strong.
While consumption of oil has increased this year, industry analysts say that the demand for the same has not been enough to eat away at the global supply of crude. They also believe that there is a need for a drop in output.
According to the Commodity Futures Trading Commission, money managers have reduced their net bet on rising prices of oil to the lowest level since March.
Elaine Levin, president of energy brokerage Powerhouse, said that the market has been taking a rather bearish view and at present everyone is chipping away at prices as low as US$ 50 per barrel.
After the recent Iranian nuclear deal, concerns grew that more crude oil would be produced over the next few months.