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By Michael Poulson, A/S Global Risk Management

Oil prices fell to a 7-month low on the back of continued negative sentiment from rising oil production in the U.S., Libya and Nigeria. The fear is that since these parties are not participating in supply cuts, that could possibly undermine OPEC-led efforts to support prices. Libya and Nigeria are exempt from the current production cut deal since they have experienced fighting and disruptions, U.S. is not part of the deal to cut 1.8 mio. barrels per day until end of Q1-2018.

Libya's oil production has risen by over 50,000 bpd to 885,000 bpd, following an interim agreement to settle a dispute between state oil firm National Oil Corp (NOC) and a European crude and national gas producer that resulted in restarting output at its oil facilities. Earlier in the year, the company had shut down production at its concessions in the Sirte basin during the dispute. The shutdown had also curbed production at other oilfields. OPEC member Libya, expects its output to recover to 900,000 bpd in the short term, the NOC said last week. Furthermore, Libya is targeting an output level of 1 mil bpd by the end of July. In a further boost to Libya's prospects, an official from Harouge Oil Operations - which operates the port of Ras Lanuf - said on Monday that 3 storage tanks that had been damaged by fighting have been restored and are ready for use. This brings the total number of functioning tanks at Ras Lanuf to 7.

Saudi Arabian energy minister, Al-Falih, stated yesterday that the market will re-balance soon. Most likely in Q4 this year. He also stated that the increasing production by Libya and Nigeria remains within the agreement of 500,000 barrels per day. However, markets continue to focus on oversupply issues as news of floating storage around 2017-high levels emerged yesterday.

In absence of other economic news, financial market focus will be on various Fed member speeches this week following last week's interest rate hike.

Tonight, the weekly oil stocks data from the American Petroleum Institute will be followed closely ahead of tomorrow's official EIA oil inventory report. Consensus is a 2 mio. barrel drop in crude inventories.

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A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.