Oil hits 6.5-year low as US supplies rise

US crude inventories continued to rise last week, as imports rose and shale production fell slower than expected, despite falling prices.

India’s exports in July fell by 10.30 percent at $231.37 billion from $257.92 billion during July past year.

And markets opened up weak again on Thursday. Oil market speculators cut their bullish bets on US crude to the lowest level in five years, reducing combined futures and options positions in New York and London by 14,884 contracts to 89,035 in the week to August 18, the US Commodity Futures Trading Commission said.

“While a renewed decline in drilling activity might provide some support for prices, at best they are only likely to grind a little higher over the next few years”, analysts at Capital Economics said in a note to clients.

The IEA said that global oil supply increased by 550,000 barrels a day in June to 96.6 million barrel per day (mbd), up 3.1m bpd from the same month a year ago.

WTI for September delivery, which expires Thursday, dropped $1.82 to close at $40.80 a barrel on the New York Mercantile Exchange.

The new sign of trouble in the world’s second-largest economy and top energy importer, following Beijing’s unexpected devaluation of its yuan currency last week, added to long-running concerns about high oil production and weak demand growth.

Commercial inventories increased by 2.6 million barrels last week, according an Energy Information Administration report this week, jolting energy analysts. Brent crude, the global benchmark, fell to $47 a barrel.

The front-month in Brent, the global benchmark for oil, settled down $1.65, or 3.4 percent, at $47.16 a barrel.

“Couple that with the stronger dollar and weakness out of China and it’s a recipe for lower prices ahead”, said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland. Oil supplies typically decline in spring and summer because refiners make more gasoline to meet summer driving demand. The agency said it expected West Texas Intermediate crude to average $49 per barrel this year and $54 per barrel in 2016.

Prices had steadied earlier on Wednesday after a six-week rout driven by global oversupply and concerns about falling demand in Asian economies and the US.

Spot prices of Western Canada Select (WCS), a marker for heavy, diluted bitumen from Alberta’s oil sands sank to a 12-year low near $20 a barrel.