LONDON • Oil fell for a second day yesterday to hit one-month lows after an unexpected surge in United States inventories, and the return of more Nigerian crude aggravated investor concerns about an already oversupplied market.

The oil price has slipped below US$50 a barrel despite a pledge by the world's largest exporters to extend an output cut of 1.8 million barrels per day (bpd) into next year, in an effort to reduce bulging global inventories.

Adding to concern about supply outstripping demand, Royal Dutch Shell on Wednesday lifted force majeure on exports of Nigeria's Forcados crude, bringing all the country's oil grades fully online for the first time in 16 months.

Brent crude was down 26 US cents at US$47.80 a barrel by 1137 GMT, having touched an earlier high of US$48.60, while US crude futures fell 25 US cents to US$45.47 a barrel. The market has also come under pressure from news of rising output from Libya, which together with Nigeria is exempt from the production cut made by the Organisation of the Petroleum Exporting Countries and its partners.

"I've been quite bullish for the second half of this year, based on supply and demand balances, and I would still not give up on that idea, that rebalancing is going to start in the second half," PVM Oil Associates strategist Tamas Varga said.

"But if Nigerian and Libyan production is picking up as well as they are now, then slowly, I am probably going to have to start changing my mind."

REUTERS