Oil dropped a third day in London May 11 amid speculation that a global oversupply will persist.
An excess of oil around the Atlantic may curb rallies, according to Morgan Stanley and Barclays. Unsold exports from West Africa, Azerbaijan and the North Sea are piling up, resembling conditions last summer when oil began a 60% plunge, the banks said.
The U.S. rig count fell by 11 to 668 last week, extending a slide that started in December, according to Baker Hughes Inc.
Oil rebounded through last week from a six-year low in March amid speculation record U.S. output from shale will slow.
The rally may still falter as the nation’s crude inventories are more than 100 million barrels above the five-year average for this time of year, government data show.
Brent for June settlement declined 63 cents, or 1%, to $64.76 a barrel on the London-based ICE Futures Europe exchange in New York. Total volume was 11 % below the 100-day average for the time of day.
West Texas Intermediate for June delivery dropped 23 cents to $59.16 a barrel on the New York Mercantile Exchange.
Volume was down 27% from the 100-day average. The U.S. benchmark crude traded at a $5.45 discount to Brent.