Oil prices fell towards six-year lows yesterday after data showed Japan’s economy contracted and producers in the US added drilling rigs for a fourth straight week despite a recent rout in prices.

Japan’s economy, the world’s third biggest oil consumer, shrank in the second quarter from a year earlier, adding to fears that slowdowns in Asia’s biggest economies will weigh on oil demand.

The global oversupply picture was exacerbated by another weekly jump in US oil rig additions, hinting at growing production, and news that Oman produced a record-breaking one million barrels a day in July.

US crude, or West Texas Intermediate (WTI), for September was trading 70 cents lower at $41.80 a barrel at 0830 GMT, close to its lowest level in more than six years.

Brent for October was down 60 cents at $48.59 a barrel, still a few dollars shy of its six-year low of $45.19. The September contract expired on Friday.

Production by the Organisation of the Petroleum Exporting Countries is running well above demand filling stockpiles worldwide. Iran is expected to increase its oil exports once Western sanctions are lifted after ratification of a recent nuclear deal.

Many analysts expect prices to remain depressed as bearish factors hinting at sustained oversupply are set to persist.

Demand for crude oil is set to fall in the next few weeks as refineries start annual maintenance. A number of European refineries will close for maintenance in September and October, including Royal Dutch Shell, Statoil and Total.