Tokyo - Oil prices slipped further in Asia on Tuesday, weighed down by a strengthening dollar as concerns about weakening demand in China added to expectations a global oversupply will last for years.
The US benchmark, West Texas Intermediate for September delivery, was down seven cents to $41.80 in late-morning trade. WTI has lost more than 30 percent in the past two months, bringing it to the lowest level since March 2009.
Brent crude for October gave up 13 cents to $48.61.
Oil has led a slump in energy commodity prices in the past month “due to concerns about falling demand from China and robust global supply, especially in the US”, research house Capital Economics said.
Strong output from US shale oil producers and the Organisation of the Petroleum Exporting Countries have outpaced the growth in demand, leading to an oversupply which has depressed prices.
BMI Research, a subsidiary of financial information provider Fitch Group, predicted the glut will persist until 2018.
“The return of Iranian oil to market, coupled with strong project pipelines in North America, the Middle East, West Africa and Kazakhstan, will see global supply expansion outstrip the growth in global consumption for the next two years,” it said.
Punishing Western sanctions that have restricted Iran's oil exports for years are expected to be lifted once it is verified that Tehran is complying with a deal to curb its nuclear ambitions.
Analysts say the return of Iranian oil will add to the current excess, further dampening prices.
Anticipation that Federal Reserve will raise interest rates as early as September and China's surprise devaluation of the yuan have also boosted the US currency, making dollar-priced oil more expensive in the global market.
This tends to discourage demand and leads to lower prices.
AFP