Oil prices drop as US reports higher crude supplies

[NEW YORK] Oil prices fell on Wednesday after US government data showed higher crude stockpiles, adding to concerns about a global supply glut.

US benchmark West Texas Intermediate for delivery in September dropped US$1.67 to US$49.19 a barrel on the New York Mercantile Exchange, finishing below US$50 for the first time since April 2.

European benchmark Brent oil for September delivery fell 91 cents to US$56.13 a barrel in London.

The US Department of Energy said US commercial crude stockpiles rose by 2.5 million barrels last week, while supplies at the closely-watched Cushing, Oklahoma hub added 800,000 barrels.

The report also showed US crude production little changed at near-record levels of about 9.6 million barrels per day.

"There's a lot of negativity in the market right now," said John Kilduff, founding partner at Again Capital.

"With the driving season winding down here and the peak demand being in its final weeks, it's another bearish element to the story."

Analysts also cited the strengthening dollar as a drag on crude prices. Because crude is sold in dollars on global market, the commodity becomes more costly for buyers using other currencies when the greenback strengthens.

The drop in oil below US$50 a barrel could have "a psychological impact" leading to further selling, according Tim Evans, analyst at Citi Futures.

AFP