Crude oil hits six-year low on growing stocks

Oil prices fell 2 percent on Monday, with U.S. crude hitting six-year lows, on signs of higher output in the United States and Libya and a possible nuclear deal that could end sanctions for Iran, allowing more of its oil into the market.

A market data provider estimated a fresh build of more than 3 million barrels at the Cushing, Oklahoma delivery point for U.S. crude futures last week, traders said, adding to worries that stockpiles in the United States could hit record highs for a tenth straight week.

In Libya, output has risen to around 490,000 barrels per day (bpd), double from a few weeks ago, an industry source said.

The United States and Iran, meanwhile, inched closer to a political deal that would set the stage for a landmark nuclear agreement and removal of sanctions against Tehran, although differences remained. Iran said it will boost oil exports once the sanctions are lifted.

Brent closed down $1.23 at $53.44 a barrel, after hitting a six-week low at $52.50.

U.S. crude futures settled down 96 cents at $43.88. It had tumbled nearly $2 earlier to a March 2009 low of $42.85. Technical analysts predicted the next low at $37.

'The U.S. is aflood with oil and other production points around the world are not letting up in their output. The question is how much more oil can we take before the storage tanks hit capacity?” said Gene McGillian, senior market analyst at Tradition Energy in Stamford, Conn.

Brent and U.S. crude fell over the last two weeks on renewed fears of an oil glut, after February's rebound from a 60 percent price drop in seven earlier months.

World stockpiles are growing by 1.6 million bpd and will hit 1.7 million bpd in the second quarter, French bank Societe Generale estimated.