Crude prices hit 5-month lows as glut fears weigh

Oil prices have fallen, hitting their lowest levels since November last year, as volatile markets extended Thursday's near 5 per cent loss further over concerns of oversupply and fears of an emerging glut.

Oil prices fell by as much as a 3 per cent on Friday, after prices crashed to five-month lows in the previous session, as concerns about global oversupply wiped out all gains since producers moved to cut output in November.

European benchmark North Sea Brent crude fell 1.8 per cent to $47.49 a barrel in early morning trade on the Singapore trading platform on Friday, while US crude dropped 2.1 per cent to $44.58 a barrel.

US light sweet West Texas Intermediate (WTI) crude futures were trading at $45.40 per barrel, down 12 cents, or 0.3 per cent, after a more than 4 per cent drop the previous session.

Oil is at its lowest level since November, when producers' cartel Opec and major producers outside the Opec struck a deal to cut output and drain off excess supplies from the market.

Opec and other producers had pledged to cut production by 1.8 million barrels per day during the first half of the year in a bid to tighten the market, but the market has not felt the supply curbs and remains well supplied so far.

While the steep price fall is likely to force Opec members to extend production cuts when they meet later this month, analysts do not expect producers to scale back output any further.

Traders pointed to soaring US oil production, which has risen over 10 per cent since mid-2016 to 9.3 million bpd, levels close to top producers Russia and Saudi Arabia.

In fact, the amount of oil stored in tankers in Malaysia's waters has surged again recently, after drawing down slightly in March and April, in signs of an oversupply.

Opec is scheduled to meet on 25 May to decide whether to extend the cuts beyond June or to scale back production further.

Some analysts, however, expect Opec members to extend production cuts later this month, although the prospect of deeper cuts appeared slim.