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Oil dips 6th day as easing disruptions counter US supply drop
[TOKYO] Oil fell a sixth day, heading for the longest run of declines since February, amid signs that global supply disruptions are fading, offsetting a US crude stockpile drop.
Futures slid as much as 1.4 per cent in New York after dropping 6.3 per cent the previous five sessions. Output in Canada is expected to ramp up this month after wildfires cut production while Nigerian militants are pursuing peace talks with the government. US stockpiles dropped for a fourth week to 531.5 million barrels and remain about 33 per cent above the five-year seasonal average, the US Energy Information Administration said Wednesday.
Oil's 80 per cent rally from a 12-year low in February is faltering on speculation that higher prices will encourage more output and as global supply disruptions ease. Nigerian militants, whose attacks on oil infrastructure have cut the country's output to its lowest level in 27 years, said they are considering peace talks for the first time.
"We still, when you think about it, have a surplus of supply because it has really only been disruptions that have seen that surplus disappear," David Lennox, an analyst at Fat Prophets in Sydney, said by phone.
"The market is now starting to suggest that once the disruptions are behind us, surplus will re-appear and the rally that we have seen in the prices will evaporate."
WTI for July delivery fell as much as 66 US cents to US$47.35 a barrel on the New York Mercantile Exchange and was at US$47.41 at 9:15 am Tokyo time.
Total volume traded was 6 per cent above the 100-day average. The contract slipped 48 US cents to settle at US$48.01 on Wednesday.
Brent for August settlement declined as much as 48 US cents to US$48.49 a barrel on the London-based ICE Futures Europe exchange. Prices on Wednesday dropped 86 US cents, or 1.7 per cent, to US$48.97. The global benchmark crude traded at a 57-US cent premium to WTI for August delivery.