Oil set for sharp weekly loss as glut weighs

The International Energy Agency said there was a record 3 billion barrels in tanks worldwide

Crude oil futures were on track for their biggest weekly loss in more than two months as swelling stocks weighed on the market.

The International Energy Agency (IEA) said there was a record 3 billion barrels of crude and oil products in tanks worldwide.

"The underlying sentiment is bearish," PVM analyst Tamas Varga said. "I don't see anything that could support prices rising in the long term."

Brent crude was down five cents from the previous day at $44.01 per barrel at 1436 GMT and was on track for a nearly seven per cent weekly loss.

US crude fell by 60 cents to $41.15 a barrel. The benchmark closed almost three per cent down on Thursday on a 4.2 million barrel rise in US crude inventories.

Some of the weakness could be down to technical factors, among them the expiry of the December Brent futures contract today, which can reduce liquidity and exaggerate price movements.

But there was a string of bearish indications on physical oil.

"It's difficult now to see the light at the end of the tunnel in the US," said PetroMatrix managing director Olivier Jakob. "But the pressure on crude oil is really global." The IEA, in its Monthly Oil Market Report, said that ballooning global stockpiles of crude and oil products could increase the overhang into next year.

"The current forecast is for a mild winter in Europe and the US If it turns out to be true, bulging stock levels will add further pressure and oil market bears may choose not to hibernate," the IEA said.

Tens of millions of barrels of oil are also sitting on tankers looking for homes, threatening logistical paralysis.

Crude markets have been dogged by oversupply, estimated between 0.7 million bpd and 2.5 million bpd being produced above demand, which has resulted in prices falling by almost two thirds since June 2014.

Oil was also caught in a larger commodities market drop. The Thomson Reuters/Core Commodity CRB Index, a global benchmark for commodities, was near its lowest since 2002.

An economic slowdown in Asia, led by the region's two biggest economies - China and Japan - has led to concerns about slowing consumption, though it has held up so far.

There were also signs that traders expect more price falls, with a soaring number of options taken to sell crude if prices fall to $40 or even $25 per barrel.