Oil market heads lower

[NEW YORK] Oil prices fell on Thursday on resurgent supply glut worries as traders discounted the odds of a near-term deal by major petroleum producers to cut output.

US benchmark West Texas Intermediate for March delivery fell 56 cents to US$31.72 a barrel on the New York Mercantile Exchange.

Brent North Sea oil for April delivery shed 58 cents at US$34.46 a barrel in London.

Oil prices had risen sharply on Wednesday on weakness in the dollar and speculation of a potential deal by major producers to cut output.

On Thursday, the dollar fell again but "fundamentally the picture remains weak," said Gene McGillian of Tradition Energy.

"For a real rally to take hold, I think we need to see some kind of change, either in the fundamental picture or some kind of sign that some of the fears about the economic conditions are basically unwarranted," Mr McGillian said. "And right now, I am not convinced we're seeing either of those."

US commercial oil inventories stand at record levels following a surprisingly large build last week, according to US Department of Energy data released Wednesday.

Talk of a coordinated production cut between Russia and the Organisation of the Petroleum Exporting Countries has provided intermittent support to oil over the last week or so.

Six members of Opec and Russia, along with Oman, have said they would attend an emergency meeting of producers, said Austin Sapp, commodity analyst at Schneider Electric.

"Although this is a fundamentally bullish stimulus, a lack of support of the motion from Saudi Arabia, Opec's largest producer by a wide margin, and doubts over Russia's actual willingness to cooperate with a cut in output, continue to undercut producer hopes that the meeting will be made a reality," Mr Sapp said.

AFP