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Oil sinks to two-month lows as global stockpiles mount
[NEW YORK] Oil dived on Friday to two-month lows after the International Energy Agency said commercial crude stockpiles in developed nations had risen to a record high three billion barrels.
The IEA's latest market report renewed concerns over the global supply overhang that has driven a 60 per cent collapse in oil prices since last year.
US benchmark West Texas Intermediate for delivery in December fell US$1.01 to US$40.74 a barrel.
In London, Brent North Sea crude for December slid 45 cents from Thursday's close to stand at US$43.61 a barrel.
Both contracts ended around eight per cent lower for the week.
"The market is being overwhelmed by rising supply," said Michael Corcelli, chief investment officer of hedge fund Alexander Alternative Capital LLC in Miami.
"We could test the six-year lows reached in August at any moment. We will either break through or put in a bottom," he told Bloomberg News.
Crude futures had already plunged on Thursday as the weekly US stockpiles report showed soaring inventories.
"Demand for oil has particularly slid in two of Asia's biggest economies, China and Japan," said ETX Capital analyst Dominic Stewart.
The market was also pulled lower this week by the strong dollar, which makes commodities priced in the US unit more expensive for buyers with weaker currencies.
The IEA predicted world oil demand would grow by a slow 1.2 million barrels per day in 2016, and said that, on the supply side, there had been no change in output in October from the powerful Opec cartel.
Members of the Organisation of the Petroleum Exporting Countries have kept production high in an aggressive bid to retain market share and pressure high-cost US shale producers.
"The Opec meeting scheduled for December may shed some light on how the organisation plans to tackle the global glut, but it remains unlikely that a cut may be implemented this year," noted FXTM research analyst Lukman Otunuga.