US crude inventories probably expanded by 2.5 MMbbl in the week through March 9, according to a Bloomberg survey before EIA data on Wednesday. While Friday's jump helped push prices higher for the week, futures are still below their peak in January, with the market struggling to recoup losses from last month's broader market slump.
Hedge funds increased bets on falling West Texas Intermediate crude prices by the most this year, according to the U.S. Commodity Futures Trading Commission. The U.S. government expects major shale regions to boost output by 131,000 bopd in April, spurring fears that surging supplies will undermine OPEC's efforts to clear a glut.
USA crude oil production soared past 10 million barrels per day (bpd) in late 2017, overtaking output by top exporter Saudi Arabia.
The reduction came as gross short positions on the New York Mercantile Exchange climbed to their highest level in almost a month. "We have monthly reports from the International Energy Agency and OPEC in the coming days to influence prices, but for now, crude is having a downbeat start to the week, unwinding some of Friday's effervescent rally".
"Oil prices pulled back yesterday as basic fundamentals of oversupply continued to worry the markets", said Sukrit Vijayakar, director of energy consultancy Trifecta.
Both crude benchmarks dropped by around 1 percent on Monday after the U.S. Energy Information Administration said output from the shale basin would hit a new record high in April.
Brent crude futures-where Nigeria's oil is pegged-sold at $64.77 per barrel, down 18 cents, or 0.3 percent.
For the record, the Islamic republic is allowed to pump up to 3.8 million barrels per day (bpd) under the cutback deal, and Zanganeh said his country could produce about 100,000 bpd more.
In Libya, the Zawiya oil terminal returned to normal operations late on Tuesday after workers who were blocking ships from docking ended a strike, two sources said.
The Energy Information Administration (EIA) said the U.S. may drastically reduce its import of crude oil from Nigeria by 2022, going by its projection of becoming a net energy exporter in four years.
Among refined products, Nymex reformulated gasoline blendstock-the benchmark gasoline contract-was down 0.5%, at $1.89 a gallon.