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Oil prices continue downward slide
[NEW YORK] Crude oil prices fell on Monday, deepening a long slide as traders expect US production will remain strong, adding to abundant global supplies.
US benchmark West Texas Intermediate (WTI) for September delivery closed at US$41.87 a barrel, down 63 cents from Friday's settlement after a technical modest rebound Friday.
In London, Brent North Sea crude for October, the international benchmark, fell 45 cents to US$48.74 a barrel in its first day of trade.
"Oil prices are starting the new week of trading with further losses after ending last week down for the seventh consecutive week - the longest losing streak since the beginning of the year," said Commerzbank analysts in a research note.
The WTI contract has lost more than 30 per cent in the past two months, bringing it to the lowest level in about six and a half years.
WTI was under pressure after Baker Hughes data showed on Friday that the number of rigs drilling for US oil increased last week, the sixth rise in seven weeks.
Phil Flynn of Price Futures Group said the increase in the rig count spurred "a fear that US production isn't going to fall" amid high output, putting downward pressure on prices.
Ted Sloup of iiTrader.com said the WTI trading session had been expected to have "more fireworks" at the expiration of the September contract, "but it's actually been very quiet." Mr Sloup said the market has more or less stalled around US$42 a barrel. "There's a nice wall of support" in a market that he called "way oversold".
"The conditions are there for a big rally but you can't discount the fact that this market is extremely bearish," he added.
Tim Evans of Citi Futures noted that a firmer US dollar, after Japan reported Monday that its economy contracted in the second quarter, may have contributed to the weight on the market.
A stronger greenback makes dollar-priced crude oil relatively more expensive, tending to dampen demand.