Oil prices slide as worries about global supply glut mount
Oil production companies have been increasing the number of rigs they have drilling for crude in recent weeks
The slump in oil prices deepened Monday, pulling down the price of U.S. crude to the lowest level in more than four months.
The move came as traders braced for softer demand amid an increase in the number of active rigs and signs of weakness in U.S. construction spending and manufacturing.
Benchmark U.S. crude fell $1.95, or 4.1 percent, to close at $45.17 a barrel in New York. U.S. crude has been declining since reaching a high this year of $61.43 a barrel on June 10. It's down 15 percent so far this year.
Brent crude, a benchmark for international oils used by many U.S. refineries, declined $2.69, or 5.2 percent, to $49.52 a barrel in London. It's down 13.5 percent this year.
Several factors have put pressure on oil prices.
Oil production companies have been increasing the number of rigs they have drilling for crude in recent weeks.
The number of rigs exploring for oil in the U.S. rose by five last week to 664, according to oilfield services company Baker Hughes Inc. All told, the rig count has increased in four of the past five weeks.
That contributed to a 21 percent decline in the price of oil last month.
On Monday, a couple of economic reports weighed on oil prices, adding to growing speculation that global demand is set to weaken.
The Institute of Purchasing Managers' manufacturing index slipped to 52.7 last month from 53.5 in June. The latest reading, which economists had expected to remain unchanged from the previous month, signals that U.S. factories were a little less busy in July.
Meanwhile, the Department of Commerce said construction spending rose just 0.1 percent in June from a month earlier.
“Some of the economic numbers that came out today were not supportive of an increase in demand,” said Robert Yawger, director of energy futures at Mizuho Securities USA. “It's a headline market and the headlines have all been negative.”
In other futures trading on the New York Mercantile Exchange, wholesale gasoline fell 9.8 cents to $1.675 a gallon, heating oil fell 5.8 cents to $1.531 a gallon and natural gas rose 3.2 cents to close at $2.748 per 1,000 cubic feet.