Oil prices extend losses on fresh supply glut fears

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SINGAPORE: Oil prices slipped to fresh three-month lows on Wednesday as worries about a global oversupply resurface ahead of the release of US stockpiles data later in the day.

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With the US summer driving season—when demand peaks—drawing to a close investors are growing increasingly concerned that stocks in the world’s top crude consumer remain at elevated levels.

The Energy Information Administration is due to release a report Wednesday, with a survey of analysts warning gasoline inventories rose in the previous week, while oil supplies dipped for a tenth week.

The EIA last week announced a smaller-than-forecast drop, which sparked a sell-off in the commodity.

On Wednesday at about 7:15 a.m. local time, US benchmark West Texas Intermediate was down 22 cents at $42.70 while Brent fell 25 cents to $44.62. The losses come after a three-day sell-off.

“The general driver behind the negativity seems to be the excess crude and gasoline stockpiles,” Angus Nicholson, a markets analyst at IG Ltd. in Melbourne, said.

“The market is very much in a down trend and it doesn’t look like it’s going to reverse at the moment. There is some key technical support around $40 a barrel.”

Adding to the downward pressure was a pick-up in the dollar following series of strong US economic figures as well as an increase in the number of rigs coming online, meaning more production.

After topping $50 a barrel early last month on the back of output disruptions, the cost of crude has tumbled about 15 percent in recent weeks as the crucial US holiday driving season comes to an end and global demand remains weak.

It had fallen to near 13-year lows below $28 in February, as world markets were crippled by worries over China’s economy, weak demand, tepid global growth and a supply glut.

AFP

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