Oil Eases Further Below $50 on Oversupply

Reuters

Oil eased further below $50 a barrel on Wednesday, falling for a third day, on concern a supply glut will persist and demand slow down as economic growth moderates in No. 2 consumer China.

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Chinese growth for the third quarter is expected to fall below 7 percent for the first time since the global financial crisis. The International Energy Agency (IEA) said on Tuesday the oil market would remain oversupplied in 2016.

Brent crude was down 30 cents at $48.94 a barrel as of 1310 GMT. Prices have more than halved from June 2014. U.S. crude fell 51 cents to $46.15.

"Prices should remain low," said Daniel Ang, an investment analyst at Phillip Futures. "We are still in oversupply."

The IEA forecast on Tuesday that oil demand growth would slow next year and a potential increase in supply from Iran would counter slowing output from the United States and other countries outside OPEC, keeping the market oversupplied.

The Organization of the Petroleum Exporting Countries in 2014 dropped its longstanding policy of supporting prices by cutting output, choosing instead to defend market share against higher-cost producers such as U.S. shale oil.

In a sign the strategy is working, a forecast from the U.S. Energy Information Administration sees U.S. shale production falling by the most on record in November, extending a nationwide output decline into a seventh month.

"Non-OPEC supply will probably decrease more steeply than previously anticipated," said Carsten Fritsch, analyst at Commerzbank in Frankfurt. "Shale oil production in the U.S., for example, is now falling sharply."

Still, the latest round of weekly U.S. supply reports is likely to suggest no end to the glut is yet in sight.

Analysts expect reports from industry group the American Petroleum Institute (API) and the U.S. Department of Energy (EIA) will show crude stocks rose by 2.9 million barrels.

The API releases its data at 2030 GMT, followed by the EIA on Thursday.

OPEC has shown no interest in cutting production to support prices, but cash-strapped member Venezuela has been pushing for the group once again to control output and seek a "floor" for prices at $70.

Venezuelan Oil Minister Eulogio del Pino said on Tuesday eight non-OPEC countries had been invited to attend an Oct. 21 technical meeting of oil experts, which will discuss Venezuela's suggestion of a price floor.

(Additional reporting by Meeyoung Cho in Seoul; Editing by Jason Neely and David Evans)