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Oil slips back towards 18-months lows on oversupply, economy concerns

Both crude oil benchmarks have lost more than a third of their value since the beginning of October and are heading for losses of more than 20 per cent in 2018

Christopher Johnson | Reuters  |  LONDON 

What oil at $50 a barrel means for the world economy, India

fell on Thursday after rebounding 8 per cent in the previous session, as worries over a glut in crude supply and concerns over a faltering global economy pressured prices even as a stock market rally offered support.

dropped $1.67 a barrel, or 3.1 per cent, to a low of $52.80 before recovering to around $53.45 by 1205 GMT. U.S. slipped $1.30 to $44.92 and was last 80 cents lower at $45.42.

reached multi-year highs in early October but are now approaching their lowest levels for 18 months.

Both benchmarks have lost more than a third of their value since the beginning of October and are heading for losses of more than 20 per cent in 2018.

"Fear of a bear market remains in place," said at Vienna-based consultancy

Three months ago it looked as if the global would be under-supplied through the northern hemisphere winter as U.S. sanctions removed large volumes of Iranian crude.

But other have more than compensated for any shortfall, filling global inventories and depressing prices.

The fuel glut has combined with faltering investor sentiment in other asset classes, producing a bear market for oil.

Stock rebounded on Wednesday after U.S. President Donald Trump's administration attempted to shore up investor confidence.

The Organization of the Petroleum Exporting Countries met earlier this month with other producers including and agreed to reduce output by 1.2 million barrels per day (bpd), equivalent to more than 1 per cent of global consumption.

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But the cuts won't take effect until next month and has been at or near record highs in the United States, and Saudi Arabia, with the U.S. pumping 11.6 million bpd of crude, more than both and

Although U.S. sanctions have put a cap on Iran's oil sales, has said its private exporters have "no problems" selling its oil.

"need more concrete evidence on improving fundamental metrics and to bring the supply-demand relationship back to balance before can reach a real bottom," said Margaret Yang, market analyst for

Data on the U.S. market will appear in the next couple of days with figures from the on Thursday and a report from the on Friday.

A Reuters survey estimated that U.S. crude inventories dropped 2.7 million barrels in the week to December 21.

First Published: Thu, December 27 2018. 17:52 IST
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