Oil prices drop on high supplies

Oil prices fell Thursday after a mixed US energy report showed a healthy decline in crude stockpiles but a rise in output amid a global supply glut.

US benchmark West Texas Intermediate for September delivery was down 92 cents at $44.23 a barrel compared with Wednesday’s close.

Earlier Thursday, it hit a 4.5-month low at $44.20.

Brent North Sea crude for September eased 60 cents to stand at $48.98 a barrel late afternoon in London. Brent had earlier struck a new six-month low at $48.88.

The US Department of Energy on Wednesday said crude stockpiles in the world’s top consumer slid 4.4 million barrels in the week through July 31, indicating robust demand.

But it also showed US production rising by 52,000 barrels a day to 9.5 million barrels daily, rebounding from the previous week’s dip.

“Crude prices continued to remain weak with focus on oversupply,” said Sanjeev Gupta, analyst at EY consultants.

Dealers had been hoping for a slowdown in US output, and increased demand during the summer driving season, could whittle down the huge global supplies that were a key reason for the collapse in prices since the middle of last year.

Gupta said Friday’s US jobs report for July “will considerably impact crude prices.”

Traders are looking to see if the expected bullish report will lift the dollar and subsequently persuade the Federal Reserve to raise interest rates more quickly.

A strong greenback discourages crude purchases outside the US because oil is priced in dollars.