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Oil prices mixed; US contract rebounds slightly
[NEW YORK] Crude prices finished mixed Thursday, with US oil taking a breather from the market slide that is driven by persistent concerns about high production and a global oversupply of crude.
US benchmark West Texas Intermediate for September delivery closed at US$41.14 a barrel in its last day of trade on the New York Stock Exchange, gaining 34 cents from Wednesday's settlement.
Brent North Sea crude for October delivery, the international benchmark, fell 54 cents to US$46.62 a barrel in London.
WTI prices haven fallen more than 30 per cent since this year's peak in June. The small rebound Thursday could be due to a weaker dollar, said Gene McGillian of Tradition Energy.
A softer greenback makes dollar-priced crude oil less expensive, tending to stimulate demand.
"We're reaching the level where the selloff might seem a little overextended and I think the market is trying to find a footing," he said.
Mr McGillian noted the US futures contract had dropped as low as US$40.21 a barrel earlier in the day, the lowest level in more than six years.
"It seems as if every time we get some kind of bearish information the market continues to go lower," he said, emphasising that the market would closely follow Friday's weekly US oil count.
Petroleum services firm Baker Hughes publishes the weekly report on active US oil rigs, which market-watchers see as an indicator of US crude production and demand.
Mr McGillian said that with WTI near US$40, the risk/reward ratio in the market is starting to turn against production.
Signs that crude supplies could start to fall because of reduced US drilling, any ramping-up of geopolitical risks, and indications that China's economic slowdown will be manageable, could turn the price tide, he said.
"The market is vulnerable to a turnaround, that's why the selloff has slowed a bit," Mr McGillian said.
On the other hand, Citigroup saw WTI possibly falling to US$32 a barrel.
"Oil balances point to further oversupply throughout 2015 begging the question how low can oil go," the US banking giant said in a market commentary, adding that hitting the 2008 low of US$32.40 a barrel "is a conceivable reality."