Oil continues decline on supply glut

AP File Photo

SINGAPORE, Singapore—Oil prices fell for a third day in Asia trade Thursday after figures showing high US crude stockpiles and increased Saudi production.

Official US data on Wednesday showed a jump in crude inventories, taking by surprise investors who expected a drawdown in supply, pushing prices of the commodity down by 3 percent overnight.

While gasoline supplies and US domestic production have fallen, analysts warn that global production levels are far outstripping demand.

A monthly report from the Organization of Petroleum Exporting Countries also showed Saudi Arabian oil production at nearly 10.5 million barrels per day in July—a record high, above peak levels seen the same time last year.

At about 0350 GMT, US benchmark West Texas Intermediate for September delivery was down 19 cents to $41.52 a barrel while North Sea Brent for October delivery was also down 17 cents to $43.88.

“Oil is increasingly looking like it may want to retest its US$39 lows that it touched at the start of August,” said Angus Nicholson, a strategist at IG Markets, said in a note.

Oil prices entered a “bear” market last week, having fallen more than 20 percent from peak levels above $50 a barrel seen in early June, and closing below $40 for the first time since April.

They rebounded Monday after news broke that OPEC will be meeting informally next month on the sidelines of an energy conference—ahead of scheduled November talks—boosting expectations that OPEC could intervene to limit production.

But markets are sceptical after two similar previous meetings earlier this year failed to to agree on any production ceiling.

“The market remains weak in the mid term, and the rebound in the number of active rigs continues to add to concerns about global oversupply,” EY services oil and gas head Sanjeev Gupta said in a note.

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