Futures slumped 3.6 percent in New York and 2.6 percent in London. OPEC oil production increased in September, led by a rebound in Libyan output to the highest level in more than a year, a Bloomberg survey showed Tuesday. Both benchmarks capped their biggest quarterly declines in more than two years. WTI may approach $90.63 after breaking below $91.50, according to Bloomberg First Word oil strategist Eric D. Pradas.

“We are going to continue to see lower prices as we go forward,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “Fundamentally we are just very well supplied. The dollar continues to get stronger and it’s adding pressure to oil.”

WTI for November delivery fell $3.41 to end at $91.16 a barrel on the New York Mercantile Exchange, the lowest settlement since May 1, 2013. It was the biggest one-day loss since November 2012. Prices have lost 13 percent this quarter, the most since June 2012. The volume of all futures was 70 percent above the 100-day average.

Brent for November settlement slid $2.53 to $94.67 a barrel on the London-based ICE Futures Europe exchange, the lowest close since June 28, 2012. Volume was 22 percent above the 100- day average. Prices have decreased 16 percent this quarter. WTI was at a discount of $3.51 to Brent on ICE, compared with $2.63 yesterday, which was the narrowest since August 2013.

Third Month

Oil dropped for a third straight month as supply gains offset the U.S.-led military campaign against Islamic State. Brent is down 8.3 percent in September, compared with a 5 percent retreat for WTI.

“It’s the quarter end and a lot of hedge funds are pulling money out of the market,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston.

Reformulated RBOB gasoline futures slid 4.1 percent to $2.5869 a gallon on the Nymex, for a quarterly drop of 16 percent. The October contract expired today.

“The weakness in the expiring RBOB contract is the primary driver today,” Stephen Schork, president of Schork Group Inc. in Villanova, Pennsylvania, said by phone. “The secondary driver is the end of the quarter, which leads to book squaring. A tertiary reason is the strength of the dollar, which always weighs on commodity markets.”

Reduced Positions

Speculators reduced their net long positions on WTI by 4.8 percent in the week ended Sept. 26 to 193,965 futures and options combined, according to the Commodity Futures Trading Commission.

Oil also followed declines in other commodities as the Bloomberg Dollar Index climbed to 1,073.81, the highest since 2010. The Bloomberg Commodity Index fell 1.4 percent. A stronger dollar reduces commodities’ investment appeal.

U.S. crude stockpiles probably expanded by 1.5 million barrels last week, a Bloomberg News survey showed before an Energy Information Administration report tomorrow.

U.S. crude stockpiles may have climbed last week as refineries started conducting seasonal maintenance. Plants typically schedule planned work for September and October, when they move from maximizing gasoline output to producing winter fuels.

‘Continuous Decline’

“What we are seeing is a continuous decline since the highs in June,” said Harry Tchilinguirian, BNP Paribas SA’s London-based head of commodity markets strategy. “We have not only financial deleveraging, but also physical surplus in the market. The dollar is going to be dominating.”

U.S. domestic production rose to 8.87 million barrels a day in the week ended Sept. 19, the most since March 1986, according to EIA estimates. A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies from shale formations in the central U.S.

U.S. output gains are pushing out imports. Crude oil shipments to the U.S. fell 1.24 million barrels a day to 6.87 million in the week ended Sept. 19, the lowest level since May.

“Our reduction of imports is the same as an increase of supply to the world,” said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas. “The supply-demand fundamentals favor lower oil prices. A lot of speculators are getting out of long positions.”

Libyan Output

The International Energy Agency said earlier this month that higher exports from Libya and booming U.S. production “deepened the overhang in crude markets and overshadowed any lingering worries of potential output disruptions in Iraq.”

Libya’s oil production was at 900,000 barrels a day, unchanged from Monday, according to National Oil Corp. The country is working to restore crude output after a year of unrest reduced it to the smallest producer in the Organization of Petroleum Exporting Countries at one stage.

The U.S. and its European and Arab allies have conducted thousands of air missions against Islamic State militants in Syria and Iraq.

In northern Syria, Islamic State’s offensive against the town of Kobani sparked an exodus of tens of thousands of Syrian Kurds, raising concern that the conflict would widen. Tensions increased Monday after errant shells fired by Islamic State militants landed inside Turkey, injuring five people, Turkish Kurdish officials said.