Oil falls on oversupply concerns

Investing.com - Oil futures were mixed in the early part of Tuesday’s Asian session as traders pondered the notion that supply may once again outstrip demand this due to a tepid global economic recovery. Trade was sluggish because U.S. markets were closed Monday due to the Martin Luther King, Jr. national holiday.

On the New York Mercantile Exchange, light sweet crude futures for March delivery dropped 0.11% to USD95.94 per barrel.

The Organization of the Petroleum Exporting Countries (OPEC) recently announced its member states have been paring production in an effort to avert significant price retrenchment. The 12-member cartel accounts for 40% of global oil output.

Even after Saudi Arabia, OPEC’s largest producer, announced a December production cut, OPEC said it expects global oil supplies will be more than sufficient to cover demand this year.

News of ample supplies and limited demand are seen as keeping a lid on oil futures prices despite ongoing civil unrest in the Middle East and North Africa. Following a four-day siege at a natural gas facility in Algeria, an OPEC member, other major North African producers such as Libya and Egypt have been increasing security at their energy facilities. Libya, also an OPEC member, is home to Africa’s largest oil reserves.

Also seen contributing to robust oil supplies this year is increased production in the U.S. Due to increased production at various shale formations, the U.S., the world’s largest oil consumer, is moving from net importer to net exporter of oil.

The U.S. Energy Information Administration recently said it expects increased U.S. oil production to reach record levels this year.

Elsewhere, Iraq, also an OPEC member, said on Monday it discovered a new oil field with at least 1 billion barrels of reserves in the southeastern part of the country. Iraq is home to the world’s fourth-largest oil reserves.

Brent crude futures for March delivery traded on the ICE Futures Exchange rose 0.07% to USD111.84 per barrel.