Oil falls close to three-month low as oversupply weighs
(Reuters) Oil prices fell close to three-month lows on Wednesday 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 LCOc1 was on track for the first monthly loss since January and the largest of 2016. Futures traded down $0.51 at $44.36/bbl by 1045 GMT.
US West Texas Intermediate (WTI) crude CLc1 was trading down $0.22 at $42.70/bbl, 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 US crude stocks fell by 827 Mbbl in the week to July 22, well short of the 2.3 MMbbl draw that had been expected.
"Falling gasoline stocks and a renewed decline in US oil production would contribute to stabilising oil prices," said Carsten Fritsch, commodities analyst at Commerzbank.
DXY has also weighed on oil prices over recent weeks. A stronger US currency makes dollar-denominated 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.
"My view is that oil prices will find a low between $39 and $42 per barrel over the coming weeks," said Ric Spooner, chief market analyst at CMC Markets.
"After that, however, we are coming closer to seeing a balanced market again," he added, saying that $50-$60 a barrel would represent such supply and demand balance.
Eldar Saetre, chief executive of Norwegian state oil producer Statoil, said he expects the market to fall into balance over the course of this year.
"We see clear signs that we are on our way to a balanced oil market," he said.
Reporting by Karolin Schaps; Additional reporting by Stine Jacobsen in Oslo and Henning Gloystein; Editing by David Goodman
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