Oil slide stops at $48 as US stocks drop again

Crude Oil

US crude inventories dropped for a seventh consecutive week, falling 8.95 million barrels last week to 466.5 million barrels to their lowest since January 2016, the Energy Information Administration said.

At 10.71 million bpd, China's crude refineries saw in July their lowest daily throughput rate since September past year amid oversupply of fuels on the domestic market. OPEC last week reported a 172,600-barrel-per-day increase in oil production in July for the cartel.

Crude oil prices suffered a dual blow Monday from steady, though at times shaky, production recovery in Libya and from a report of an expected increase in USA shale oil activity. "This is not the report that [the Organization of the Petroleum Exporting Countries] wanted to see", said James Williams, energy economist at WTRG Economics.

Aside from supply and demand, investors also closely followed developments in the U.S. On the other hand, the Brent Crude's deliveries for October stumbled at the $50.73 a barrel price shedding a total of $1.37 or 2.6% on the ICE Futures Europe; the prices signal lows from nearly three weeks or so since July. US light crude settled down 4 cents at $47.55, off a session low of $47.02, the lowest since July 25.

"It is a strong dollar, concern about China demand, and weak volumes", said Phil Flynn, an analyst with Price Futures Group in Chicago.

"This bullish print is being tempered somewhat by unchanged gasoline inventories versus the expectation of a draw", said Matt Smith, director of commodity research at ClipperData.

The authority calculated commercial inventories of crude oil had gone down by 8.9 million barrels in the week to August 11, after a draw of 6.5 million barrels a week earlier. Worse still, this momentum is not expected to change into the first quarter of 2018 when the current OPEC deal where oil output will be cut by 1.8m bpd will have run out. The compliance outside the OPEC is even worse at just 67 percent.

OPEC member Angola released a loading plan showing October exports were planned at a 13-month high.

On the demand side, analysts see a gradual slowdown in consumption growth.

Official U.S. data is released late Wednesday morning. China's annual oil demand will peak at 690 million tons by 2030, or about 12% of the global total, according to China National Petroleum Corp.

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