Oil fell around 1% on March 20 as investors continued to unwind bets on higher prices after record cuts last week because of concerns that growing U.S. oil output could hamper an OPEC-led production cut deal.
Benchmark Brent crude futures were down 55 cents at $51.21 a barrel (bbl) at 7:19 a.m. CT (12:19 GMT). U.S. West Texas Intermediate crude futures were trading 73 cents lower at $48.05/bbl.
"Speculative investors have thrown in the towel it seems. We've got record selling in the week ending March 14 and the bleeding has not stopped yet," said Carsten Fritsch, senior commodities analyst at Commerzbank in Frankfurt.
Oil futures have retreated in the past two weeks as a supply overhang driven by rising production from the U.S. overshadows a deal by OPEC and other producers to reduce output.
The persistent glut prompted hedge funds and other money managers to cut their net long U.S. crude futures and options positions by a record amount in the week to March 14.
On March 20, ICE data showed speculators reduced long positions on Brent by 66,683 contracts, the highest since November 2016.
This means that speculators last week cut more than 150,000 contracts betting on firmer oil prices, a record high.
Growing U.S. production is playing into concerns about the effectiveness of the deal to cut production by OPEC and non-OPEC members.
The prospect of higher output from Libya, which is exempt from the deal, is adding further bearish sentiment.
Libya's National Oil Corp. (NOC) said it was confident of regaining control of two key oil ports, Es Sider and Ras Lanuf, which have a combined capacity to export 600,000 bbl/d.
"Hedge selling from producers and long-liquidation from funds is a bearish cocktail," said Ole Hansen, Saxo Bank's head of commodity strategy.
An upgrade in supply estimates also led analysts at J.P. Morgan to cut their 2017 and 2018 price forecasts.
"The risks that OPEC has painted itself into a corner cannot be ignored and it may need to extend or even increase cuts, if the response from shale producers is more vigorous than we currently model," the firm said in a report.