USA crude prices sank almost 5 per cent, despite growing friction among disparate members of the Organization of Petroleum Exporting Countries and an attack by militants in Tehran, one of the largest OPEC producers.
Output will average 10.01 MMbopd next year, topping the previous high of 9.6 million in 1970, according to the Energy Information Administration's monthly Short-Term Energy Outlook.
US oil producers exported a record 1.3 million barrels of oil a day in May, according to the Houston Chronicle.
Oil prices have declined by more than 4% since the previous week which is one of the largest weekly declines since May after data on Friday revealed that USA oil drillers are expanding to 11 more active rigs which is the twentieth weekly rise in a row.
New data from the Department of Energy suggests that during the first week of June, Iraqi oil entered the U.S.at the quickest rate in the past five years - marking the first time the nation's exports exceeded those from Saudi Arabia over the same time period. The American Petroleum Institute said on Tuesday crude inventories fell by 4.6 million barrels last week. Refinery utilization rates fell by 0.9 percentage points to 94.1%, which is still seasonally strong.
Greg McKenna, chief market strategist at futures brokerage AxiTrader, said he believed there was "a real chance" OPEC solidarity surrounding production cuts might fracture.
The rise in USA production has been driven by a record 20th straight rise in oil drilling for new production, with the rig count rising by 11 in the week to June 2, to 733, the most since April 2015.
Brent crude futures were at $49.95 per barrel at 0710 GMT, down 17 cents, or 0.3 per cent, from their last close. "A week ago, you could say three of the past four weeks, it has come down, you are starting to see a trend develop".
The OPEC basket of 13 crude oils closed trade on Monday at $47.37 a barrel.
While the OPEC and non-OPEC producers agreed to extend until March 2018 their ongoing oil output cuts, India has reached an understanding with the global oil cartel to establish a joint working group to serve as a forum for "producer-consumer dialogue" to address mutual concerns.
Rising U.S. production is also putting pressure on oil.
Last year OPEC announced a momentous deal between its member nations and some non-OPEC producers to reduce their oil output. Analysts and traders surveyed by The Wall Street Journal were anticipating a 3.5 million barrel decrease in the amount of oil in US storage tanks.
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