Oil prices fell to two-month lows on Friday after data this week indicated US production hit record levels, raising concerns the market will become oversupplied.
Brent crude, the international benchmark, fell 0.62% to $64.41 a barrel on Friday. Just 15 days ago, Brent hit a three-year high, rising of $71.28 a barrel.
Similarly, Nymex West Texas Intermediate (WTI) fell 0.88% to $60.61 a barrel on Friday, having hit a three-year high of $66.66 a barrrel little more than two weeks ago.
Analysts said that the current bout of risk aversion in equity markets had prompted a withdrawal of speculative long positions - or investors backing a rise in oil prices.
Warren Patterson, commodities strategist at ING said: "Friday's Commitment of Traders report is likely to show a fairly large reduction in the speculative net longs.
"Apart from the fact that the market is trading 3% lower over the reporting week, aggregate open interest has also fallen by 5% to 2,396,395 lots – suggesting the liquidation of longs."
Underpinning the losses this week, however, was the report on Wednesday from the Energy Information Administration (EIA) that showed an increase in US crude inventories.
The EIA report showed US crude stockpiles rose by 1.9 million barrels last week, while US refineries - now working full tilt after the recent maintenance season - pumped out large increases in gasoline and other distillates.
Furthermore, the EIA showed that US production last week averaged 10.25 million barrels per day - up 332 bpd on the previous week and a new weekly record.
"Given the recent pick-up in US drilling activity, we believe this production growth will continue moving forward," said ING's Patterson.