Oil prices drop before US data

[LONDON] Oil prices slid on Wednesday, but avoided new lows, as dealers awaited US stockpiles data for an indication of demand in the world's biggest consumer of crude.

US benchmark West Texas Intermediate for delivery in January shed US$1.06 to US$62.76 a barrel.

Brent North Sea crude for January lost 80 cents to stand at US$66.04 in London midday deals compared with Tuesday's close.

Both contracts fell to five-year low points on Tuesday before rebounding late in the day.

"With the global supply glut, the main concern at the moment is the level of production in the US," Daniel Ang, an analyst at broker Phillip Futures told AFP.

"The US stockpiles report will be in focus to see if there is any change in production growth," he said.

Analysts surveyed by The Wall Street Journal said they expected US crude oil inventories to have fallen by 2.7 million barrels in the week to December 5 when the Department of Energy release its official stockpiles report Wednesday.

The department on Tuesday modestly reduced its 2015 US oil production forecast to 9.3 million barrels per day from a previous estimate of 9.4 million.

Crude prices have plunged by more than 40 per cent from their 2014 peaks in June owing to slowing growth in China and emerging-market economies, a recession in Japan and a near-stall in the eurozone.

On top of that, the Opec cartel last month said it would maintain output levels despite ample global supplies, in part owing to cheaper oil extracted from North American shale rock.

AFP