US crude drops below $40 a barrel

US crude hovered near the $40 a barrel mark early on Tuesday, while the global benchmark Brent was at three-month lows as higher output and exports from big producer countries weighed on market sentiment.
West Texas Intermediate, the US marker, dropped to as low as $39.82 late on Monday and was just above the $40 level in London on Tuesday.
The world’s leading energy bodies have said a rebalancing of supply and demand is well under way, but oil prices remain under pressure while previously bullish hedge funds are turning more negative.
Market participants also point to increasing production and exports from Opec countries, just as concerns rise about falling crude demand from refineries as refined products inventories swell.

“There was a temporary balance in the oil market. Now supplies that were disrupted have started to resume and the sharp downturn in US supply that was expected to balance the oil market looks shallower,” said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas.
“There are doubts in the minds of even the most fervent bulls as to when the market fully comes into balance,” he added.
Brent reversed all the hefty gains it had early on Monday to finish 0.8 per cent lower at $42.14 – a level it was near early on Tuesday.