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Oil prices wobble near 2-week lows as global glut concerns intensify

Published 09/15/2016, 04:54 AM
© Reuters.  Oil struggles near 2-week lows amid global glut concerns
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Investing.com - Oil prices fell to a new two-week low during European hours on Thursday, adding to steep overnight losses amid mounting concerns over a global supply glut.

On the ICE Futures Exchange in London, Brent oil for November delivery touched a session low of $45.68 a barrel, a level not seen since September 2. It was last at $45.88 by 4:50AM ET (08:50GMT), up 3 cents, or 0.07%.

A day earlier, London-traded Brent futures sank $1.25, or 2.65%. Prices are down nearly 5% so far this week following news that Libya and Nigeria were set to ramp up production, as the end of some conflicts in the countries opened up supply.

Elsewhere, crude oil for October delivery on the New York Mercantile Exchange was down 10 cents, or 0.23%, at $43.47 a barrel after slipping to an intraday low of $43.32, the weakest since September 2.

On Wednesday, New York-traded oil futures plunged $1.32, or 2.94%, after data showed large weekly builds in U.S. petroleum products.

According to the U.S. Energy Information Administration, distillate inventories including diesel, increased by 4.619 million barrels last week, much higher than expectations for a rise of 1.543 million barrels.

The jump was the biggest weekly build since January and put distillate stocks at six-year seasonal highs.

The report also showed that gasoline inventories rose by 567,000 barrels, disappointing expectations for only a 343,000-barrel increase.

For crude oil inventories, the EIA reported a drop of 559,000 barrels, compared to forecasts for a gain of 3.8 million barrels.

Meanwhile, oil traders continued to weigh prospects that major oil producing nations will freeze output to support the market when they meet later this month.

The Organization of the Petroleum Exporting Countries, led by Saudi Arabia and other big Middle East crude exporters, will meet non-OPEC producers led by Russia at informal talks in Algeria between September 26 and 28.

Chances that the upcoming meeting would yield any action to reduce the global glut appeared minimal, according to market experts. Instead, most believe that oil producers will continue to monitor the market and possibly postpone freeze talks to the official OPEC meeting in Vienna on November 30.

An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus.

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