Mubasher: Oil prices dropped on Wednesday, extending losses from a 7% slide in the earlier session, as soaring supply and the prospect of fading demand spooked traders.

By 7:36 am GMT, US Nymex crude futures fell 0.52% to $55.40 per barrel (pb), while global benchmark Brent futures declined 0.26% to $65.30 pb.

Both contracts would likely drop further, with Brent ranging from $62.18 pb to $63.95 pb and Nymex ranging from $53.26 pb to $54.13 pb, Thomson Reuters technical commodity analyst Wang Tao said.

US crude production from seven main shale basins is set to hit a record of 7.94 million barrels per day (bpd) next December, the Energy Information Administration (EIA) said on Tuesday.

A surge in onshore production drove overall US output to hit a record of 11.6 million bpd, rendering the US as the world’s largest oil producer ahead of Russia and Saudi Arabia.

US production is set to climb above 12 million bpd within the first half of the next year, according to most analysts.

This surge in US crude production was contributing to rising inventories, which jumped 7.8 million in the week ended 2 November to 432 million as refineries lowered output as reported by the American Petroleum Institute (API).

This came amid concerns among members of the Organization of the Petroleum Exporting Countries (OPEC) about rising supplies and price plunge.

OPEC is talking now about withholding crude supplies in the next year to prop up prices.

“OPEC and Russia are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next OPEC meeting on 6 December,” Vontobel Asset Management commodities head Jon Andersson told Reuters.