Oil prices fell below $48 a barrel today after Opec pledged to keep pumping at almost full tilt despite ample crude stockpiles in the United States.
US crude oil prices fell 70 cents to $47.97 a barrel after a shaky recovery today from a three-month low. Prices had fallen more than 17 per cent from the record high at $58.28 struck in early April.
Brent crude oil fell 80 cents to $47.86 a barrel, erasing today's gains.
Opec president Sheikh Ahmad al-Fahd al-Sabah said yesterday the cartel was supplying more than 30 million barrels per day (bpd) - a 25-year high - against an official ceiling of 27.5 million bpd.
"We will continue to focus on the market and will continue to supply the market," Sheikh Ahmad, who is also Kuwaiti oil minister, told reporters at a workshop in Kuwait.
But he added Opec was unlikely to raise its formal output limit to match the actual supply. He said $40 a barrel was an acceptable price for Opec's basket of crude oils, nearly $6 below its current level.
Middle East Gulf oil producers have been raising output since March to build up stocks ahead of the fourth quarter, when demand for Opec oil is expected to rise to 30.5 million bpd.
A number of Opec members have discounted any possible cuts to supply despite the current softer market. The Organization of the Petroleum Exporting Countries is scheduled to meet on June 15th to plan its production for the second half.