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Oil prices fall on supply worries, profit-taking
[NEW YORK] Global oil prices fell sharply on Monday on worries about excessive supply and profit-taking after last week's rally.
US benchmark West Texas Intermediate for November delivery tumbled US$2.53 to US$47.10 a barrel on the New York Mercantile Exchange, about a five percent decline.
European benchmark Brent oil for November delivery shed US$2.79 to US$49.86 a barrel in London.
Oil prices had gotten a lift early in the day from a report by the Organisation of the Petroleum Exporting Countries that pointed to deeper cuts in non-Opec oil output and said factors that have depressed crude prices are "starting to show signs of alleviation."
However, oil prices soon turned negative, a decline partly attributed to profit-taking after US crude prices jumped nine per cent last week.
Analysts also still see plenty of evidence the oil glut will persist.
Tim Evans, analyst at Citi Futures, said Opec oil output remains much above expected needs. The cartel pumped 31.57 million barrels per day in September, up 109,000 barrels a day from the previous month, according to the Opec monthly report.
"Opec oil ministers and speculative bulls alike can support market sentiment with happy talk of a market that seems to have bottomed, but we see the prospect of another 12 months of rising inventories as an ongoing downside risk for prices," Mr Evans said.
"We still have a weak fundamental picture overhanging the market," said Gene McGillian, broker and analyst at Tradition Energy.