Oil headed for the biggest monthly decline this year, amid speculation a global supply glut that drove prices into a bear market will persist.
Futures fell as much as 0.8 percent in New York and are down 19 percent in July. US crude stockpiles are almost 100 million barrels above the five-year average for this time of the year, while exports from southern Iraq rose to a record this month. Oil producers from BP Plc. to Royal Dutch Shell Plc. have started a new round of cost cutting as prices decline.
Oil’s worst month since December paces a drop across raw materials, as expanding surpluses and concern slower economic growth in China will crimp demand. Commodities also slid as the dollar gained on signals from Federal Reserve Chairman Janet Yellen that the US central bank may increase rates.
“The supply situation is adequate and that’s why we’ve seen oil drift lower,” David Lennox, an analyst at Fat Prophets in Sydney, said by phone. “The fall in Chinese equities shook investor confidence and that’s why we saw a lot of retracement in commodity prices.”
West Texas Intermediate (WTI) for September delivery declined as much as 37 cents to $48.15 a barrel in electronic trading on the New York Mercantile Exchange and was at $48.22 at 12:39 p.m. in Sydney.
The contract fell 27 cents to $48.52 on Thursday. Total volume was about 30 percent below the 100-day average. Prices have lost more than 20 percent from their closing peak this year on June 10.
Global supplies
Brent for September settlement was 20 cents lower at $53.11 a barrel on the London-based ICE Futures Europe exchange. Prices have decreased 16.5 percent for the month. The European benchmark crude traded at a premium of $4.90 to WTI.
US crude stockpiles have been bolstered by production that rose to the highest level in three decades last month. The nation pumped 9.4 million barrels a day through July 24, data from the Energy Information Administration show.