What is the outlook for oil as prices slip into bear market territory

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Oil prices fell 2% to trade below $43 a barrel on Tuesday, entering bear market territory, after news of increased supply from Libya and Nigeria continued to scupper attempts by OPEC and non-OPEC producers to cut global output.

The price of West Texas Intermediate (WTI) crude oil futures fell as low as $42.75 a barrel before closing at a nine-month low of $43.23.

This is the lowest level since 15 November last year, two weeks before OPEC agreed a deal to cut output by 1.8 million barrels a day.

WTI is now down more than 20% on its 52-week closing and intraday highs, slipping into bear market territory, even though last month OPEC and non-OPEC countries agreed to extend their production cuts until March 2018.

According to Reuters, in May OPEC and non-OPEC compliance with the deal reached the highest it had been since the agreement, at around 106%, but this has done little to curb the falls in prices.

Investors will now wait for official US weekly inventory reports, with US crude oil stocks forecast to fall by 2.1 million barrels this week.

The rise of US shale has been cited as the main reason for the current glut, with the International Energy Agency now expecting non-OPEC production to grow by 1.5 million barrels per day in 2018, slightly more than the expected increase in global demand.