Brent futures ended at their lowest since April o while West Texas Intermediate oil slipped into bear territory and closed below $49 a barrel for the first time in more than three months weighed down by concerns about the persisting global supply glut and shaky demand.
Light sweet crude for September delivery, the new front month contract, ended down 74 cents or 1.5% at $48.45 a barrel on the New York Mercantile Exchange. Based on the most active contracts, its intraday low of $48.21 was the lowest since April 2.
Brent future, the global benchmark, ended 86 cents or 1.5% lower at $55.7 a barrel on the London based ICE Futures Exchange.
Oil prices started the day brightly finding support on a weaker dollar which later strengthened on a report showing a decline in the number of people filing for jobless claims in the US.
According to the US Labor Department’s weekly report, the number of fresh applications for unemployment benefits fell last week to their lowest since 1973 suggesting that the US economy was firmly back on track.
A stronger dollar is bearish of r the demand of commodities denominated in dollars like gold as it makes them more expensive to holders of foreign currencies.
The dollar recovered from its lows and there is just a negative mood in commodities and for oil there is the worry that the global economy is going to affect demand,” Phil Flynn, analyst at Price Futures Group in Chicago, told Reuters.
The US Energy Information Administration reported Wednesday the oil inventories in the US grew by an unexpected 2.5 million barrels last week dampening the crude outlook with most analysts not expecting the glut to clear any time soon.
“We expect the market to remain heavily oversupplied for the next year, keeping prices subdued,” Thomas Pugh, commodities analyst at Capital Economics, told the Wall Street Journal.
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