After blip, oil prices keep heading south

[NEW YORK] Oil prices returned to their downward course on Monday, as extended declines in prices darkened the mood among investors.

A barrel of West Texas Intermediate for September delivery, the US benchmark, fell US$1.54 to US$40.06 a barrel after having wavered around the US$40 threshold during the day on the New York Mercantile Exchange.

The contract price for WTI has fallen almost 22 per cent since hitting a high for the year on June 8 but it has not closed under US$30 in 15 weeks.

In London, North Sea Brent for October delivery fell US$1.39 to US$42.14 a barrel on the Intercontinental Exchange.

On Friday, the price in New York had briefly risen on word of weaker-than-expected US economic growth figures, which caused the dollar to fall.

Phil Flynn of Price Futures Group said it was in the nature of the bear market to be self-reinforcing.

"With commodity hedge funds having their biggest short position in history, they have a tendency to be able to push the market down when there's no news," he said.

"The market has been down seven of the last eight days. It's extremely oversold," said Mr Flynn.

"So we could muster a rebound if we close above US$40 but other than that the mood is just really negative."

AFP