U.S. crude prices on Monday broke below $40 a barrel for the first time since April, weighed by a survey showing output in OPEC reached record highs last month amid the biggest addition of U.S. oil rigs in two years.
U.S. West Texas intermediate (WTI) fell $1.58, or 3.8 percent, to $40.02 a barrel by 12:56 p.m. ET (1656 GMT), after sliding as low as $39.86 just after midday.
Brent crude was down $1.51, or 3.5 percent, at $42.02 a barrel, after reaching an intra-day low of $41.87.
Both benchmarks fell around 15 percent in July, with the decline being WTI’s largest monthly drop in a year.
John Kilduff, founding partner at energy hedge fund Again Capital, said sentiment has turned decidedly negative, as evidenced by a rise in short positions in WTI futures and a “complete abandonment” of speculative long positions, said .
“It’s built upon the glut that’s out there that everyone thought was going to be clearing, but hasn’t,” he told CNBC.
“All the theses of the bulls in this market are becoming unwound,” he said.