Oil prices fell to the lowest in more than two months early on Tuesday as rising supply continues to offset strong summer demand.

West Texas Intermediate crude oil for September delivery was last seen down US$0.44 to US$63.52 to US$63.52, the lowest since June 5, while October Brent crude was down US$0.34 to US$66.29.

The drop comes as the market continues to grapple with rising supply, as OPEC+ completes the return of 2.2-million barrels per day of production cuts with a final tranche of 548,000 bpd in September, boosting output despite rising production from North and South America and expectations U.S. trade wars will slow demand growth.

"While supply is widely seen as the main driver of oil prices, deteriorating economic data stemming from US trade policy could lead to a gradual equity market downturn by year-end. In that case, the oil/equity correlation would likely re-emerge. However, the cyclical nature of our market will likely constrain supply and boost demand," PVM Oil Associates noted.

In its Monthly Oil Market Report, OPEC said left its 2025 demand and supply forecast unchanged, with supply outside the cartel seen rising by 0.8-million bpd this year and while annual demand growth this year still seen up by 1.3-million bpd, well less than the group's production increase. The Energy Information Administration will release its monthly forecast later on Tuesday morning.

Source: MT Newswires