Oil price drop after rally

22nd September 2015, Comments 0 comments

Oil prices slid Tuesday, reversing sharp gains in the previous session, hit by persistent concerns about oversupply and slower Chinese growth, analysts said.

US benchmark West Texas Intermediate for delivery in October shed $1.21 to $45.47 a barrel.

Brent North Sea crude for November delivery lost 82 cents to stand at $48.10 a barrel around midday in London.

Trading in oil is currently volatile, with prices surging in the middle of last week on easing concerns over high US supplies, before slumping and rallying once more.

"The rough zigzag pattern of recent weeks is continuing," Commerzbank analyst said in a note to clients.

"However, even if speculators are focusing on the decrease in US production at present, it is important not to forget that US crude oil stocks are still currently 28 percent or just under 100 million barrels higher than usual.

"In other words, it will take time for them to fall back to normal levels despite the drop in US production."

Weaker growth in energy-hungry China this year is meanwhile expected to cause a slowdown in the rest of Asia, the Asian Development Bank said Tuesday as it became the latest major body to revise down its forecasts for the world's number two economy.

It also warned central banks to prepare for an expected US Federal Reserve interest rate rise, with many nations already seeing huge capital outflows as dealers look for safer US investments.

Comments meanwhile from top Federal Reserve officials suggesting a US interest rate rise is still likely this year pushed the dollar higher Tuesday, adding further pressure to commodity prices priced in the currency.

© 2015 AFP

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