Oil heads for eighth straight week of falls

Oil headed for its eighth straight weekly decline Friday, as sliding stock markets added to worries that lacklustre global economic growth will hurt energy demand in an oversupplied market.

US benchmark West Texas Intermediate for October delivery dropped 16 cents to $41.16 a barrel.

Brent North Sea crude for October slid 35 cents to stand at $46.27 a barrel shortly after midday in London.

On Thursday the WTI September contract closed 34 cents higher at $41.14 before its expiry in New York, scraping off recent six-and-a-half year lows.

“Oil prices continue to be plagued by the supply glut problem,” said Bernard Aw, market strategist at IG Markets.

“Sharp falls in global equities, particularly US shares, further contributed to worries that global growth would be sluggish. This suggests that demand for energy may remain tepid,” he told AFP.

Asian shares fell on Friday, continuing a global sell-off in equities that hit Wall Street overnight and saw the Dow reach its lowest level this year as concerns about the health of the world economy snowballed.

Analysts fear a slowdown in China, the world’s second-biggest economy, could drag on global growth and curb energy demand — bad news for oil prices at a time when markets are already oversupplied with crude.

Oil has managed to hold above the key $40 a barrel mark, but US banking giant Citigroup said on Wednesday prices could fall to $32 a barrel, a multi-year low last seen in 2008.

Investors will be watching the weekly US oil rig count, due on Friday, to see if a slump in crude prices has started to dampen production in the world’s top consumer.

If there would be “any relief for crude prices, it has to come from production cuts,” Aw said.

The United States and producers from the Organization of the Petroleum Exporting Countries have decided against cutting high production levels despite falling prices as they fight over market share.