Crude oil sinks again amid global supply glut

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NEW YORK: Crude oil prices fell again over the weekend as the main US futures contract concluded its sixth straight week of losses, in a market awash with worry about the global oversupply.

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US benchmark West Texas Intermediate (WTI) for delivery in September fell 79 cents to $43.87 a barrel on the New York Mercantile Exchange, bringing the week’s losses to more than $3.

In London, Brent North Sea crude for September, the international benchmark, closed at $48.61, down 91 cents from Thursday’s settlement.

“The market continues to retreat,” said Gene McGillian of Tradition Energy. “It’s the same factors that have driven down to six-month lows for Brent and four-month lows for the WTI: worries about excess of supplies and declining demand levels, particularly out of China.”

The US futures contract, which stabilized around $60 a barrel in late April, May and June, has fallen to levels last seen in March and is approaching its lowest level in more than six years.

“There has been some renewed talk that crude oil prices are back down to levels that will prove unsustainable, but we don’t see any corresponding shift in the underlying fundamentals that would tip the global supply/demand balance to a deficit, at least in the near term,” Tim Evans of Citi Futures said in a client note.

The United States and the Organization of the Petroleum Exporting Countries are prime contributors to the global glut as they continue robust crude production.

Potentially fueling more concerns about strong American output, after the government reported Wednesday an increase in oil production last week, was the latest Baker Hughes US oil rig.

For the third week in a row the count increased, by six to 670 rigs, Baker Hughes reported Friday.

AFP

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