Oil prices steadied today, paring their earlier losses, but they was set for its largest price slide in the first half of any year for the past two decades.
Investors appeared to discount evidence of strong compliance by major producers with a deal to cut global output.
August Brent crude futures were flat at $46.02 a barrel this afternoon, having fallen earlier to seven-month lows.
US crude futures for August delivery were up four cents at $43.55, having hit their lowest since September on Tuesday.
So far this year, oil has lost 20% in value, its worst performance for the first six months of the year since 1997. Prices fell about 2% alone yesterday.
Compliance with an agreement by the Organisation of the Petroleum Exporting Countries and other producers to cut output by 1.8 million barrels per day from January reached its highest in May since the curbs were agreed last year.
Data from the American Petroleum Institute yesterday showed US crude stockpiles last week had dropped more than forecast. Gasoline and distillate inventories rose.
A government report on inventories is due later today and the official figures often differ sharply from those of the industry group.
OPEC and non-OPEC oil producers' compliance with the output deal reached 106% in May, a source familiar with the matter said. That means they cut output by more than they were required to do.
OPEC compliance with the curbs was 108%, while non-OPEC compliance was 100%, the source said. Another source confirmed compliance by all producers in May was 106%.
While compliance is high, it is what went on before the production cut that counts, BMI Research said in a note.
"A number of producers - notably Iraq, Saudi Arabia and Russia - aggressively ramped up output in the run-up to the deal, fast-tracking projects, expanding drilling programmes and deploying spare capacity," BMI said.