Oil finishes at a 9-month low, in bear-market territory –




Oil on Tuesday marked its lowest finish since August, with prices sinking into bear-market territory as investors remained concerned that rising output from the U.S. and Libya will offset OPEC-led production cuts.

Meanwhile, natural-gas prices got a modest boost as traders eye two tropical storms that have formed in the Atlantic.

July West Texas Intermediate crude CLN7, -1.95%  declined by 97 cents, or 2.2%, to settle at $43.23 a barrel on the New York Mercantile Exchange on the contract’s expiration day. That was the lowest front-month contract finish since Sept. 16, according to data from Dow Jones. Prices also ended down 20.6% from 2017’s year-to-date high above $54—putting them in bear-market territory.

Crude’s last drop into bear-market territory “actually signaled a bottom” for prices, said Phil Flynn, senior market analyst at Price Futures Group. “The bears are driving us lower and if they keep it up, they will drive [U.S.] shale producers into retreat.”

August crude CLQ7, -2.16% which became the front-month contract at the settlement, lost 92 cents, or 2.1% to $43.51 a barrel.

Brent crude for August delivery LCOQ7, -2.03%  on London’s ICE Futures exchange slid 89 cents, or 1.9%, to $46.02 a barrel. Prices ended at their lowest since mid November.

WTI saw “capitulation” ahead of the July contract’s expiration, with supply-glut fears being fed by expectations of higher Libyan production, said Flynn.

Libya, which is exempt from the output-cut accord led by the Organization of the Petroleum Exporting Countries, has ramped up production to 900,000 barrels a day, adding further pressure on the market that is awash with surplus.

Additionally, concerns about higher U.S. output kept prices under pressure. Various energy-monitoring bodies, such as the International Energy Agency, of late have projected U.S. crude output will continue rising through next year—-increases which stand to negate the bulk of the continuing OPEC-led cuts.

Weekly U.S. supply data from the American Petroleum Institute are out later on Tuesday, with the much-anticipated Energy Information Administration inventory report due Wednesday. Analysts surveyed by S&P Global Platts expect the EIA data to show that oil inventories fell 2 million barrels last week.

The OPEC-led agreement that went into effect on Jan. 1 has so far failed to cut global production down to five-year averages. Morgan Stanley pointed out that identifiable oil inventories—both oil and products in the Organization for €Economic Cooperation and Development, China and selected other non-OECD countries—increased some at a rate of around 1 million barrels a day in the first quarter.

In other energy products, Nymex July gasoline RBN7, -2.19%  fell 2.7 cents, or 1.8%, to $1.424 a gallon and July heating oil HON7, -1.18%  lost 1.6 cents, or 1.2%, to $1.395 a gallon.

Natural gas for July NGN17, +0.21%  tacked on 1.3 cents, or 0.5%, to end at $2.907 per million British thermal units. Prices dropped nearly 5% Monday to their lowest since early March as cooler weather forecasts dulled demand expectations.

Flynn, however, said traders should be keeping an eye on two weather systems in the Atlantic, which reached tropical-storm status Tuesday. The National Hurricane Center said Tropical Storm Cindy is forecast to approach the coast of southwest Louisiana late Wednesday in the Gulf of Mexico, which is home to 17% of total U.S. oil and offshore natural-gas production.

Among exchange-traded funds Tuesday, the United States Natural Gas Fund UNG, +0.00%  rose 0.2%. The Energy Select Sector XLE, -1.29%  fell 1.3%, while the United States Oil Fund USO, -1.86% lost 1.9%.