Oil prices drift lower

oil-pricesOil edged lower Wednesday in muted deals as dealers digested poor Chinese trade data and looked ahead to the weekly US stockpiles report, analysts said.

Brent North Sea crude for October slid six cents to $49.46 per barrel in London late morning deals.

US benchmark West Texas Intermediate for delivery in October fell 22 cents to $45.72 a barrel.

WTI prices had also dipped on Tuesday in subdued trade following Monday’s closure of the New York Mercantile Exchange for the Labor Day holiday.

“We are seeing trading volumes for oil futures down a third than on average. The market seems to have shrugged off the weak Chinese trade data and is now looking beyond that for cues,” Michael McCarthy, chief market strategist at IG Markets in Sydney, told AFP.

“We might see some movement … depending on how the US stockpile numbers turn out,” he said.

China said Tuesday its exports fell 5.5 percent year-on-year in August while imports plunged 13.8 percent, led by falling commodity prices, adding to worries about the strength of the world’s number two economy and top energy consumer.

The slowdown in Chinese growth, as well as a slew of other weak indicators, have sent panic through world markets, as the country is a key driver of global expansion.

In the United States, the Department of Energy will release its weekly petroleum report on Thursday, a day later than usual owing to the Labor Day holiday on Monday.

US crude reserves likely rose by 250,000 barrels in the week to September 4, according to a Bloomberg News survey of analysts. An increase in stockpiles usually points towards weaker demand.

Dealers had been hoping that an uptick in US demand, coupled with a slowdown in output, could whittle down the huge global supplies that were a key reason for the collapse in prices from around $120 in June last year.

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