As glut appears to persist, oil heads for seventh weekly drop
NEW YORK, Aug 18 — Oil headed for the longest run of weekly declines since January amid signs the global glut that’s driven prices to the lowest in six years will be prolonged.
Futures were little changed in New York, down 4.2 per cent in the week through Aug. 14. The market surplus will last through 2016, the International Energy Agency said Wednesday, while OPEC reported that output climbed last month to the highest level in more than three years. A measure of price fluctuations is poised for a second weekly advance amid mixed demand signals from China.
Oil has slumped more than 30 percent from its June closing peak as leading members of the Organization of Petroleum Exporting Countries maintain output. China’s record imports in July boosted speculation that sustained buying may alleviate a glut, while further devaluation of its currency raised concern that its economy and demand are slowing.
“It’s the ongoing supply that is causing the major worries,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “Statements from OPEC of their increased production is clearly weighing on the price, while focus has turned to Chinese growth.”
West Texas Intermediate for September delivery was at US$42.05 (RM173.24) a barrel on the New York Mercantile Exchange, down 18 cents, at 12.26pm Sydney time. The contract declined US$1.07 to US$42.23 yesterday, the lowest level since March 2009. The volume of all futures traded was 68 per cent above the 100-day average. Prices have decreased 21 percent this year.
Brent for September settlement, which expires today, slid two cents to US$49.20 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of US$6.99 to WTI. The more-active October contract was four cents lower at $49.59 a barrel.
US crude stockpiles remain about 90 million barrels above their five-year average even as production eased and supplies fell last week, according to government data. — Bloomberg
