Oil prices slump 3% amid oversupply fears

Oil prices dropped by over three percent on Thursday amid worries about oversupply and the outlook for the global economy.

International benchmark Brent crude futures were trading down at $1.90, or 3.3 percent, at $55.34 per barrel at 12.34 pm Riyadh time, while the US West Texas Intermediate (WTI) crude futures fell $1.9, or 3.9 percent, at $46.30 a barrel.

On Wednesday, Saudi Energy Minister Khalid Al-Falih said the current price dip isn’t based on supply and demand of oil, but stems in part from factors including geopolitics, US interest rates, the strength of the greenback and investor speculation. 

The OPEC and other oil producers including Russia agreed this month to cut production by 1.2 million barrels per day in an attempt to boost prices.

Meanwhile, the latest US Energy Information Administration data showed stockpiles at Cushing climbed for a fourth consecutive week by 1.09 million barrels last week.

“Wednesday’s recovery was short-covering. Investors quickly moved their attention to deteriorating fundamentals in the oil markets including more signs of slowing economic growth next year, record production and the lack of confidence with OPEC’s pledge to curb production,” Xi Jiarui, chief oil analyst at consultancy JLC told Reuters.

Oil prices are down more than 30 percent from peaks seen in October.