Oil holds near multi-month lows as glut fears persist

The opposite happened, and prices on the New York Mercantile Exchange declined $1.73 to settle at $44.73, the lowest in seven months. The increased production in the US and an increase in the numbers of operating rigs remain a big concern for the oil bulls.

Libya is pumping the most crude in four years after a deal with Wintershall AG enabled at least two fields to resume production.

Output rose by 336,000 bpd in May to 32.14 million bpd led by a rebound in Nigeria and Libya, OPEC said last week in its monthly report.

Distillate registered a build of 1.84 million barrels after the draw of 1.5 million barrels previously and the fuel data was generally bearish for prices.

The supplies of OPEC edged in the month of May as output retrieved in Libya and Nigeria.

Both benchmarks were down more than 15 per cent since late May, when OPEC, Russia and other producers extended limits on output until the end of March 2018. Despite approximately 106 percent compliance with OPEC's production cut guidelines, an increase in production in the months leading up to the production cut increased global supply which has kept pressure on prices.

Brent was trading 26 cents down at $45.76 per barrel, while US West Texas Intermediate dropped 20 cents to $43.31.

USA drillers increased the rig count by six to 747 last week, the highest level since April 2015, according to Baker Hughes.

The factors contributing to the price of crude oil have confused many seasoned observers for years. Gasoline stocks rose 2.1 million barrels and gasoline inventories now sit at 242.4 million barrels, or 9 percent, above the five-year average of 223 million barrels, according to the US Energy Information Administration (EIA) data.

Despite the deal, some OPEC members, including Nigeria and Libya, have been exempt from cutting and their rising output is seen to be undermining efforts led by Saudi Arabia.

The American Petroleum Institute (API) reported a draw of 2.72 million barrels in United States crude oil inventories, compared to analyst expectations that the EIA would report a 2.0-million barrel draw for the week ending June 16.

Baker Hughes said the USA rig count rose by 6 to 747, the most since April 2015.