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[LONDON] Oil prices fell on Thursday, driven lower by concerns about oversupply in a slowing global economy, although strong US gasoline demand helped limit losses.
The lack of any action by the world's largest exporters to follow through on a proposal last week to freeze production at January's levels if others did too also weighed on prices.
The proposal by Saudi Arabia, Russia, Venezuela and Qatar has been branded "a joke" by Iran, while Iraq, one of the largest contributors to rising Opec output, has said it supports a freeze, but its production will continue to rise.
Brent crude futures were down 37 cents at $34.04 a barrel at 1445 GMT, while US West Texas Intermediate (WTI) crude futures were down 48 cents at $31.67 per barrel. "The basic overriding position in the oil market at the moment is that the global production exceeds global demand by quite a wide margin," Ric Spooner, chief market analyst at CMC Markets, said.
In a sign of the excess supply, US crude stockpiles rose by 3.5 million barrels last week to an all-time peak above 507 million barrels, Department of Energy data showed on Wednesday.
A slowing global economy also risks hurting demand for oil and keeping prices very low.
Citi economists, whose bank cut its forecast for global economic growth this year to just 2.5 per cent from a previous forecast of 2.7 per cent, said in a note: "Global growth prospects are worsening further, with deterioration across advanced economies alongside previous weakness in emerging markets." Some indicators, however, limited Thursday's losses.
Weekly data from the US Energy Information Administration on Wednesday showed crude inventories rose to a fresh record high above half a billion barrels, but the figures also suggested output has fallen to about 9.1 million barrels per day, the same level as in October 2015.
"We would argue that the numbers are starting to show more credible evidence that the low prices are really starting to bite," consultant JBC Energy said in a note.
"With US output in decline and more reports of production shut-ins (albeit small ones) popping up around the globe, the volumes in question as well as the broader trends are starting to matter, especially from a seasonal perspective. While still only a scenario at this point, we see a credible chance that prices will at least temporarily rise to the $50 level over the next four months."