Oil heads for third weekly drop as global surplus set to worsen

[HONG KONG] Oil headed for its third weekly decline after dropping below US$30 a barrel as US crude stockpiles expanded and Iran moved closer to boosting exports, exacerbating a global glut.

Futures were little changed in New York, down 6 per cent for the week. Supplies at Cushing, Oklahoma, the biggest US storage hub, climbed further to a record as nationwide inventories rose, Energy Information Administration data showed Wednesday.

International sanctions on Iran may be lifted Monday, allowing for an increase in oil shipments from the Opec producer.

Crude capped a second annual loss in 2015 as the Organisation of Petroleum Exporting Countries effectively abandoned production limits amid a global surplus. Iran is trying to regain lost market share and doesn't intend to pressure prices with an export increase once sanctions are removed, officials from its petroleum ministry and national oil company said this month.

West Texas Intermediate for February delivery was at US$31.13 a barrel on the New York Mercantile Exchange, down 7 cents, at 7.13am. Hong Kong time. The contract advanced 72 cents to US$31.20 on Thursday. Prices slid below US$30 Tuesday for the first time in 12 years. Total volume traded was about 69 per cent above the 100-day average. Prices have lost 16 per cent this year.

Brent for February settlement expired Thursday after gaining 72 cents, or 2.4 per cent, to US$31.03 a barrel on the London-based ICE Futures Europe exchange.

Prices dropped below US$30 on Wednesday for the first time since April 2004. The more- active March contract rose 60 cents to US$30.88. The European benchmark crude ended the session at a discount of 17 cents to WTI.

BLOOMBERG