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Crude oil falls for 2nd day on oversupply concerns

Crude oil falls for 2nd day on oversupply concerns

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by staff ()

Oil prices fell on Tuesday, declining for a second day and sapping more strength from a third-quarter rally, amid signs that a global glut in crude may not be clearing as quickly as some had hoped.

US crude was down 15 cents, or 0.3 percent, at $50.43 a barrel by 0649 GMT, after closing the previous session down $1.09, or 2.1 per cent.

The US benchmark posted a third quarter gain of around 12 per cent, its strongest quarterly climb since the second quarter of 2016, but has now dropped nearly 5 per cent from a six-month high reached on Thursday.

Brent crude, the global benchmark, was down 26 cents or 0.5 per cent at $55.86 a barrel. The contract fell 67 cents or 1.2 per cent in the last session.

Brent had notched up a third-quarter gain of about 20 per cent, the biggest increase for that quarter since 2004 and traded as high as $59.49 last week. It is down about 6 per cent from that level.

“The fourth quarter is not too kind to the price of oil, as we switch from summer demand to expectations of winter demand," said Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney. “A lot of (refinery) maintenance occurs at this time so feeder demand is not there.”

Iraq had said on Monday that exports rose slightly in September from its southern oilfields, while an earlier Reuters survey indicated that overall the Organization of the Petroleum Exporting Countries (OPEC) boosted output.

Oil prices had climbed last week due to tensions in Iraqi Kurdistan after the region's independence vote, with Turkey threatening to close a pipeline that brings oil from the region in northern Iraq to the Mediterranean.

Turkey has not carried out the threat, analysts said.

The recent rally had also been driven by signs that a three-year crude glut is easing, helped by a production cut deal among global producers led by OPEC.

However, West Asian oil producers are concerned the price rise will stir US shale producers into more drilling and push the prices lower again. Key OPEC producers consider a price above $60 as encouraging too much shale output.

One bullish sign was a letter from Libya's National Oil Company on Monday that declared force majeure on deliveries from Sharara, the country's largest oilfield.