By Amrith Ramkumar and Christopher Alessi 

Oil prices fell more than 4% for the second time in the last four sessions on Monday, with uneasy traders anticipating that increased supply could cool a monthslong rally that has pushed crude to its highest level since 2014.

Light, sweet crude for August delivery declined $2.95, or 4.2%, to $68.06 a barrel on the New York Mercantile Exchange, just days after last Wednesday's 5% drop that was its largest one-day fall in more than a year. Brent crude, the global benchmark, was down $3.49, or 4.6%, to $71.84 a barrel on Monday. After nearing fresh multiyear highs early last week, oil prices plunged Wednesday on jitters about increased Libyan output and signs that major producers might boost supply.

Attacks on Libyan ports, U.S. sanctions against Iran and supply disruptions have underpinned the recent oil rally even as protectionist trade policies are raising fears of a global economic slowdown and lower consumption of materials.

But analysts said higher output from Libya and the possibility that Russia could agree to further increase supply to fill possible production gaps were hurting prices Monday. U.S. President Donald Trump, who has been asking Saudi Arabia to increase output to lower prices, met with Russian President Vladimir Putin in Helsinki Monday.

As was the case last week, traders said selling accelerated as the session went on and prices broke through their 50-day moving average -- a key technical level.

"The algorithms played a major role last week -- I believe they played right into it again today as the pattern on the charts began to wave a bear flag," said Donald Morton, senior vice president at Herbert J. Sims & Co.

The Organization of the Petroleum Exporting Countries and oil producing allies like Russia, which have been holding back output since the start of last year, agreed in late June to begin increasing production by up to one million barrels a day amid global supply disruptions. Still, some market participants said the increase was lower than anticipated.

Adding to uncertainty about supply were media reports Friday that the Trump administration is assessing whether to dip into the country's emergency oil stocks.

With so many conflicting supply signals in the market, traders are trying to weigh how much spare capacity can be brought on line while also looking at data showing falling inventories, analysts said.

"There's this idea that the Trump administration is actively trying to manage the price and trying to play ball with Russia, Iran and the Saudis all at the same time," said Chris Kettenmann, chief energy strategist at New York-based Macro Risk Advisors. "It's going to take a bit longer to work through this."

"We're constructive on prices and taking advantage of this weakness," he added.

Investors were also reacting to the news that China's economic expansion slowed a notch in the second quarter, weighed down by a top-priority government debt cleanup even before growth takes an expected hit from the trade fight with the U.S. As China is the world's largest commodity consumer, a long-expected economic slowdown could lower demand for oil and other materials.

Oil market observers are looking ahead to weekly U.S. petroleum inventory data from the American Petroleum Institute, an industry group, on Tuesday and from the Energy Information Administration on Wednesday.

Among refined products, gasoline futures fell 10.45 cents, or 5%, to $2.0022 a gallon. Diesel futures shed 7.91 cents, or 3.7%, to $2.0543 a gallon.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and Christopher Alessi at christopher.alessi@wsj.com

(END) Dow Jones Newswires

July 16, 2018 15:18 ET (19:18 GMT)

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