Global oil prices dip on supply glut

Crude prices dipped on Thursday as brimming US and Asian fuel inventories returned investor attention to a large global supply overhang, cutting short a pricerally and restricting Brent crude futures to below the $50 a barrel mark.

International benchmark Brent crude oil futures were trading down 7 cents at $ 48.98 per barrel at 0413 GMT, having closed down 1.8 percent.

US West Texas Intermediate crude futures were at $46.74 a barrel, down 3 cents, after dropping 2.8 percent on Wednesday.

Traders said price falls this week had truncated a rally that pushed crude up by more than 20 percent earlier in August on talk of a potential deal by oil producers to freeze output in an effort to rein in oversupply.

Hopes of a deal were dampened by record output from the Organization of the Petroleum Exporting Countries (OPEC) and little prospect of voluntary restrictions.

“Brent also came under pressure after ( OPECmember) Iraq said it still isn’t producing as much oil as it should be, raising concerns that OPEC supply will continue to increase,” ANZ bank said on Thursday.

With output high, not just from OPEC but also other top producers like Russia, and the demand outlook shaky, analysts said there was little prospect of an end to the glut, which has pulled down crude prices from over $100 a barrel to their current sub-$50 levels since 2014.

Analysts said that high storage levels pointed to an ongoing supply overhang that was weighing on markets.

In the United States, commercial crude oil stocks rose by 2.5 million barrels to 523.6 million barrels.

In refined products, stocks around the world are also brimming as demand slows while refinery output remains high.

“Ample inventories were due to weaker demand in Asia, but more generally were driven by excess supply generated by refiners maximizing runs, notably to produce gasoline in the US,” BNP Paribas said.