Oil approaches key $40 level in Asian trade

Meanwhile, West Texas Intermediate (WTI) crude for October delivery, a new contract, lost 49 cents to $40.8357, while Brent crude for October delivery tumbled 56 cents to $46.06 a barrel on the New York Mercantile Exchange.

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On Wednesday, the price of West Texas Intermediate, the benchmark for U.S. crude oil, fell 4.3% to $40.80 a barrel, hitting levels not seen since the depths of the financial crisis more than six years ago.

Lipow and other analysts expect US oil prices to dip below $40 a barrel.

The US Department of Energy on Wednesday said oil stockpiles rose 2.6 million barrels in the week ending August 14, and reported a 300,000 barrel rise at the closely watched Cushing, Oklahoma trading hub. According to industry research group Baker Hughes (NYSE:BHI), the number of rigs drilling for oil in the U.S. increased by two last week to 672, the fourth straight weekly gain.

Brent crude oil futures declined 0.57 dollar or 1.22 percent to trade at USD 46.05 a barrel at NYMEX.

The United States and producers from the Organization of the Petroleum Exporting Countries have decided against cutting high production levels despite falling prices as they fight over market share. It later stood at $40.30, down 50 cents from Wednesday´s close. “Thus, we would unlikely think that this would break during Asian hours (Thursday)”.

Analysts fear a slowdown in China, the world’s second-biggest economy, could drag on global growth and curb energy demand – bad news for oil prices at a time when markets are already oversupplied with crude. Minutes of the Federal Reserve’s July meeting published on Wednesday showed that policymakers express broad concerns about lagging inflation and the weak global economy, leading some investors to question the likelihood of a rate hike in September.

The U.S.is set to release data on initial jobless claims, existing home sales and manufacturing activity in the Philadelphia region later Thursday.

A softer greenback makes dollar-priced crude oil less expensive, tending to stimulate demand.

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Crude oil prices are trading sharply lower in futures market on Friday due to speculative selling amid a weakening trend in Asian trade. The September contract, which expired on Thursday, ended 34c higher.

Much More Pain Ahead In The Energy Sector