Oil prices fall for sixth day as glut bites

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A flame shoots out of a chimney at a petro-industrial factory in Kawasaki near Tokyo December 18, 2014. REUTERS/Thomas Peter/Files
A flame shoots out of a chimney at a petro-industrial factory in Kawasaki near Tokyo December 18, 2014. REUTERS/Thomas Peter/Files

By Amanda Cooper

LONDON (Reuters) – Oil prices fell for a sixth day on Wednesday, marking their longest string of losses in a year, as worsening global oversupply offset the potential lift from a weaker dollar and an expected drop in U.S. crude stocks.

A Reuters survey on Tuesday showed members of the Organization of the Petroleum Exporting Countries produced around 3 million barrels per day (bpd) of oil more than daily demand in the second quarter, compared with around 2 million bpd in the first three months of the year.

The Federal Reserve meets later in the day, but market expectations of a September rise in interest rates are fading, leaving the dollar down against a basket of currencies.

“If you look at (inventories) there’s been a pretty big build and also a build in gasoline (stockpiles) that is going to add a bit of pressure today,” said Olivier Jakob, an oil analyst at Petromatrix in Zug, Switzerland.

Front-month Brent futures were last at $53.08 a barrel, down 22 cents, by 1045 GMT, on course for their sixth straight daily decline, the longest such run since last July.

Brent hit a session trough of $52.28 on Tuesday, its lowest since Feb. 2 after a meltdown in Chinese equities raised concern over the health of the world’s top commodity consumer.

U.S. crude for September delivery last traded at $47.75 a barrel, down 23 cents on the day.

Oil prices recovered from multi-month lows on Tuesday after data from industry group the American Petroleum Institute showed U.S. commercial crude stocks fell by 1.9 million barrels last week against analysts’ expectations for a draw of 184,000.

But the inventory level of 462 million barrels reported by the API, compared with 383 million at the start of this year, reflected the extent of U.S. oversupply.

The government’s Energy Information Administration will release official U.S. oil inventory data later on Wednesday.

“Prices seem to have found the bottom of this rout as prices rebounded off a support of $46.92 and $52.68 for West Texas Intermediate and Brent,” Phillip Futures said in a note.

(Reporting by Amanda Cooper, editing by Dale Hudson and William Hardy)

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