Crude oil futures tumbled to their lowest in nearly seven years on Monday after OPEC failed to address a growing supply glut, while a stronger dollar made it more expensive to hold crude positions.
Brent and U.S. crude futures fell as much 6 percent in belated reaction to the Organization of the Petroleum Exporting Countries' (OPEC) policy meeting on Friday which ended without an agreement to lower production.
For the first time in decades, OPEC oil ministers dropped any reference to the group's output ceiling, highlighting disagreement among members about how to accommodate Iranian barrels once Western sanctions are lifted.
"We're in a tug-of-war between a heavily shorted market and a glut of oil in the U.S. and globally, as Saudi Arabia continues to produce oil at elevated levels to maintain market share," said Chris Jarvis at Caprock Risk Management, an energy markets consultancy in Frederick, Maryland.
"Couple this with a strengthening dollar as the market anticipates a U.S. rate hike this month, oil is heading lower with a near term target of $32 for WTI."