Oil prices resumed their downward spiral today after OPEC sparked fresh worries about an oversupply crisis with a forecast that global output will increase next year.
The commodity rallied for most of August on hopes for a production limitation deal at a meeting between OPEC and Russia this month, but it has taken a beating in recent weeks as traders grow cynical that the Algiers gathering will end in success.
Adding to the downward pressure has been a pick-up in the dollar and signs that demand remains weak.
The Organisation of the Petroleum Exporting Countries yesterday predicted non-member countries would see output rise in 2017, revising its previous expectations of a drop.
At around 0330 GMT today, US benchmark West Texas Intermediate dipped 40 cents to USD 45.89 and Brent fell 34 cents to USD 47.98.
Prices have seen wild swings this past week. On Thursday they surged more than two dollars after data showed US stockpiles fell the most in 17 years.
However, those gains were erased Friday as analysts said the inventories decline was because of the suspension of imports and shutdown of some production owing to a severe hurricane in the Gulf of Mexico.
“Oil prices are under pressure on renewed oversupply concerns,” Bernard Aw, an analyst with IG Markets in Singapore, told AFP.
Forecasts that US commercial crude stockpiles will show a rise when fresh data is released Wednesday would give “credence to OPEC’s prediction that output from non- OPEC producers will increase next year”, Aw added.
Traders are keeping watch on the Federal Reserve ahead of a policy meeting next week, with speculation rife that it could lift borrowing costs.
Such a move would strengthen the dollar, which would make oil more expensive for holders of other currencies, damaging demand.