Oil nears 3-month low as oversupply weighs

Oil prices fell close to threemonth lows yesterday after US industry data showed weekly oil stocks declined by less than expected, feeding into concerns over persistent oversupply dragging down prices. Global benchmark Brent crude was on track for the first monthly loss since January and the largest of 2016. Futures traded 51 cents down at $44.36 a barrel by 1045 GMT. US West Texas Intermediate (WTI) crude was trading down 22 cents at $42.70 a barrel, close to a three-month low of $42.36 reached on Tuesday.

“Today’s weakness is just part of the general belief that the market is oversupplied,” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates. Weekly industry data from the American Petroleum Institute (API) late on Tuesday showed that U.S. crude stocks fell by 827,000 barrels in the week to July 22, well short of the 2.3 million barrel draw that had been expected. Closely watched US government oil stocks data will be published later.

“Falling gasoline stocks and a renewed decline in US oil production would contribute to stabilizing oil prices,” said Carsten Fritsch, commodities analyst at Commerzbank. A firmer dollar has also weighed on oil prices over recent weeks. A stronger US currency makes dollardenominated commodities such as oil more expensive to buy. Other analysts said they expect prices to fall further in the short term as oversupply persists while demand growth stutters. — Reuters