Oil prices extend losses

(iStock)
(iStock)

London - Oil prices weakened further on Thursday with sentiment weighed down by a sharp rise in US crude stockpiles, dealers said.

At 13:30, US benchmark West Texas Intermediate for October delivery was down six cents at $44.64 a barrel.

Brent North Sea crude for November delivery receded 11 cents to $46.78 a barrel compared with Wednesday's close.

The market plunged Wednesday after the US Department of Energy (DoE) said commercial inventories in the world's top consumer last week rose to 525.9 million barrels - and were now 16% higher than the same period last year.

The figures, which came despite a dip in production, poured fresh fuel on fears about a global supply glut that has dogged the crude market for several years.

Output was down slightly at 8.49 million barrels per day, a drop of 60 000 barrels per day on last week. But imports rose by 275 000 barrels per day to 8.92 million barrels.

"US crude stockpiles have risen while OPEC heavyweights such as Saudi Arabia and Iraq continue to pump incessantly into a market that is already heavily saturated," said analyst Lukman Otunuga at traders FXTM.

He added: "Persistent concerns over the excessive oversupply of oil in the global markets (have) haunted investor attraction towards the commodity.

"It is becoming increasingly clear that investors have digested the oversupply reality with the fading optimism over OPEC securing a freeze deal in September's informal meeting enticing sellers to attack further."

Prices had soared last month as OPEC and Russia agreed to hold talks to address the supply crisis.

But those gains have been slowly wiped away by a strong dollar - making oil more expensive for holders of other units - and uncertainty over OPEC member and key producer Iran's participation in the talks.

Analysts remain doubtful oil producers will agree to any limits at the meeting in Algeria this month.

Traders are meanwhile awaiting Friday's key US jobs data, which could spur the Federal Reserve to hike interest rates and in turn send the dollar higher, denting oil demand further.

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