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Oil trades below US$39 after global rout as US glut seen rising
[NEW YORK] Oil held losses near a six-year low after a global equities and commodities selloff as US government data was forecast to show stockpiles expanded for a second week.
Futures were little changed in New York after tumbling 5.5 per cent on Monday. Inventories probably expanded by 2 million barrels through Aug 21, according to a Bloomberg survey before a report from the Energy Information Administration on Wednesday. A measure of oil-price fluctuations rose to the highest level in more than four months on Monday amid a collapse in commodities.
Oil has slumped more than 35 per cent since the year's closing peak in June on signs the global glut will persist as leading Opec members sustain output and US supplies remain almost 100 million barrels above the five-year average. The Bloomberg Commodity Index of 22 raw materials sank Monday to the lowest level since 1999 on concern of slowing Chinese demand.
"That structural glut in the oil market is going to remain," Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said in a Bloomberg television interview. "As a result of that I think you might see it head even lower, and probably head down to those December 2008 lows." West Texas Intermediate for October delivery was at US$38.21 a barrel on the New York Mercantile Exchange, down 3 cents, at 10:41 am Sydney time. The contract dropped US$2.21 to US$38.24 on Monday, the lowest close since February 2009. The volume of all futures traded was about 14 per cent below the 100-day average. Prices hit an intraday low of US$32.40 a barrel in December 2008.
Brent for October settlement was 1 cent higher at US$42.70 a barrel on the London-based ICE Futures Europe exchange. It fell US$2.77, or 6.1 per cent, to US$42.69 on Monday, the lowest since March 2009. The European benchmark crude traded at a premium of US$4.48 to WTI.