Oil prices fell in volatile trade on Tuesday, as a surge in U.S. shale oil output and deteriorating equity markets weighed on futures.
U.S. West Texas Intermediate (WTI) crude futures ended Tuesday's session down 65 cents, or 1.1 percent, to $60.71 a barrel. Brent crude futures were down 39 cents at $64.56 per barrel by 2:26 p.m. ET.
Both crude benchmarks dropped earlier on Monday after the U.S. Energy Information Administration said output from shale basins would hit a new record high in April.
U.S. crude production from major shale formations is expected to rise by 131,000 bpd in April from the previous month to an all-time high 6.95 million bpd, the U.S. Energy Information Administration (EIA) said in a monthly report on Monday.
American oil production has soared past 10 million barrels per day (bpd) in late 2017, overtaking output by top exporter Saudi Arabia. U.S. output is expected to rise above 11 million bpd by late 2018, taking the top spot from Russia, according to the International Energy Agency.
Oil prices briefly turned higher after U.S. equity markets rose at the start of trading on Tuesday, but crude futures turned lower as stocks gave up their gains.
"We've been following the S&P 500 around a lot lately," said John Kilduff, founding partner at energy hedge fund Again Capital.
Also on Tuesday, President Donald Trump announced he will replace Rex Tillerson, a relative moderate, with the hawkish CIA director Mike Pompeo as Secretary of State.
"The market is having a wobble on the back of the potential impact on future supply from Iran and also for the ramifications for the Middle East as a whole," Saxo Bank's Ole Hansen said.
"It may impact oil companies' appetite for investment, so (Iran) might not cut production but it might go some way towards dampening their ability to maintain, let alone increase, production," Hansen, a senior manager at Saxo Bank, added.
Kilduff acknowledged the news is feeding speculation that Trump could scrap the Iran nuclear deal, which could disrupt Iranian oil supplies and send prices higher. But he said the impact on Tuesday's oil price movement is likely marginal.
"You've got to jump through a couple of hoops to get there, or connect a couple of dots to make that a bullish story for oil, but at the same time there's been a lot of tensions," he told CNBC.
The oil market earlier drew support from a strike that stopped loadings at the Libyan oil export port of Zawiya, which exports crude from the 308,000-barrel per day El Sharara field.
Healthy demand and ongoing supply restraint by a group or producers led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia have been supporting oil prices.
"The average monthly increase (in shale output) in the eight months since September is 155,000 bpd. This would see shale oil production soar by 1.5 million bpd within a year enough to cover the total increase in global oil demand," Commerzbank said in a note.
"Thus OPEC has no scope to expand production from its current level."
But in a sign that an early-year rally in crude oil has fizzled out, money managers cut their combined net long positions in the six most important futures and options contracts linked to petroleum prices by 50 million barrels in the week to March 6.
— Reuters contributed to this story.