Oil is tanking 3% on another report of rising output from Saudi-led oil cartel

Essam Al-Sudani | Reuters

People work at the Halfaya oilfield in Amara, southeast of Baghdad, Iraq.

Oil prices plunged back below $49 a barrel on Tuesday after another report that OPEC’s output rose last month despite the cartel’s deal to slash production.

A survey of analysts conducted by Bloomberg News suggested OPEC’s July output rose by 210,000 barrels a day to 32.87 million barrels a day. That was a bigger jump than the 90,000 barrels-a-day rise in OPEC’s July output that a survey conducted by Reuters showed on Monday.

U.S. West Texas Intermediate crude prices tumbled $1.58, or 3.2 percent to $48.59, by 11:58 a.m. ET (1558 GMT). The contract hit a nearly 10-week high at $50.43 earlier in the session, after breaking above the key $50 level for the first time in two months on Monday.

U.S. WTI two-day performance

International Benchmark Brent crude futures were trading down $1.61, or 3.1 percent, at $51.11 per barrel, after earlier slipping from a nearly 10-month high just below $53 a barrel.

Prices were mostly lower on Monday, but surged ahead of the session’s close to settle above $50 a barrel for the first time since May. Analysts told CNBC crude oil futures face resistance to further gains after surging about 9 percent last week.

U.S. crude prices hit technical resistance near the session high of $50.40, according to John Kilduff, founding partner at energy hedge fund Again Capital.

The rise in OPEC production was not unexpected following Monday’s Reuters survey, he said, but the sharp drop on Tuesday indicates that investors perhaps bid up oil too much after Saudi Arabia vowed export cuts last week.

“People keep taking them at their word and giving it to much credit, and then the rug gets pulled out,” Kilduff said.