prices fall near 2003 lows on oversupply, demand worries
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[January 21, 2016]
By Simon Falush
LONDON (Reuters) - Oil fell on Thursday,
turning back toward 12-year lows on persistent concerns about oversupply
and the outlook for demand.
Oil futures have hit their lowest levels since 2003 this week as
investors worry that a glut of crude is combining with slowing
demand due to economic weakness, especially in China.
Benchmark Brent was down 21 cents at $27.67 a barrel by 1206 GMT.
Brent has lost 26 percent in January, on track for its biggest
monthly fall since 2008.
Front-month West Texas Intermediate (WTI) crude futures traded at
$28.00 per barrel, down 35 cents from their previous close.
Broad market sentiment remained bearish as producers around the
world pump 1 million to 2 million barrels of crude every day in
excess of demand, creating a huge overhang of stored oil.
Iran's return to the oil market this month added to the glut, after
the lifting of international sanctions aimed at discouraging the
country from obtaining nuclear weapons.
"There are worries surrounding demand and oversupply," said Hans van
Cleef, senior energy economist at ABN Amro in Amsterdam.
He said weaker demand in the Middle East, which has been hit by
lower oil prices, could add fuel to the sell-off and there was
little to stop crude falling to $20 per barrel.
Indicating the glut may grow further, Iraq's Oil Minister Adel Abdul
Mahdi told Reuters the country's southern region planned to increase
output by up to 400,000 barrels per day (bpd) this year to over 4
Concerns are also growing that China's economy could slow further
and cut demand in the world's second-largest oil consumer.
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"Lower commodity and oil prices reflect weakening demand," HSBC said
Meanwhile, Venezuela has requested that OPEC hold an emergency
meeting to discuss steps to prop up oil prices, although delegates
from other members of the producer group said such a gathering was
Investors will watch for data from the Energy Information
Administration at 1600 GMT for more detail on the extent of
oversupply in the United States.
Analysts expect crude stocks to have risen by 2.8 million barrels in
the week ended Jan. 15, according to a poll of eight analysts.
Data from the American Petroleum Institute, a U.S. industry group,
showed crude inventories rose by 4.6 million barrels.
(Additional reporting by Roslan Khasawneh and Henning Gloystein in
Singapore; editing by Dale Hudson and Jason Neely)
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