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MTECHTIPS:-U.S. crude plunges to fresh 6-yr lows, amid mounting oversupply concerns

MTECHTIPS:-U.S. crude plunges to fresh 6-yr lows, amid mounting oversupply concerns

U.S. crude futures fell to fresh six-year lows on Thursday amid a stronger dollar, as energy traders continued to unload long positions upon concerns of a glut of oversupply on global markets. On the New York Mercantile Exchange, WTI crude for September delivery wavered between $41.92 and $43.72 a barrel before closing at $42.23, down 1.07 or 2.50%. Texas Long Sweet Futures have now closed lower on nine of the last 12 sessions. During that span, WTI crude has lost more than 14% in value as it has remained below $50 a barrel for a period of more than three weeks. On the Intercontinental Exchange (ICE), brent crude for September delivery traded between $49.26 and $50.83, before settling at 49.59, down 0.59 or 1.18%. The spread between the international and U.S. benchmarks of crude stood at 7.36, above Wednesday’s level of $6.93 at the close. While U.S. crude stockpiles fell for a second consecutive week on Wednesday, traders preferred to focus more intently on long-term forecasts for dwindling production. For 2015 as a whole, the U.S. Energy Information Administration (EIA) lowered supply growth estimates to 650,000 barrels per day, below prior forecasts of a 750,000 bpd build by 100,000. The Energy Department’s supply forecasts still exceed demand growth expectations of 400,000 bpd, which remained unchanged. By next year, the EIA expects U.S. crude output to decline by 400,000 bpd from prior forecasts of a 150,000 bpd reduction. In terms of demand growth, the EIA anticipates increased growth of 190,000 bpd, up from previous estimates of 130,000 bpd. Crude prices have fallen sharply by 60% since peaking above $100 a barrel last summer, as supply continues to outstrip demand.

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