Worries over global oil glut

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TOKYO (Reuters) – Oil turned lower yesterday after posting gains earlier in the session as traders look ready to test new lows for crude prices with worries persisting over a global glut.
 
Brent crude futures were down $0.15 at $44.67 a barrel at 07:15 GMT, after spending much of the Asian trading day in positive territory. They fell 2.6 percent in the previous session to their lowest since November.
 
US crude futures were down $0.14 at $42.39 a barrel, after also spending much of the day trading higher. On Wednesday, they settled down at $42.53, after touching their lowest intraday level since August 2016.
 
Since peaking in late February, crude has dropped around 20 percent, with only brief rallies, completely erasing gains at the end of the year in the wake of the initial OPEC-led production cut.
 
The Organisation of Petroleum Exporting Countries and other producers agreed to cut output by 1.8 million barrels per day from January for six months, subsequently extended for a further nine months.
 
“The market didn’t actually buy into the cut for fundamental reasons. It bought into it because it was a shift in strategy from OPEC and it gave the market hope,” said Matt Stanley, fuel broker at Freight Investor Services in Dubai.
 
“But OPEC didn’t do enough and other producers were always going to fill the void,” he said.
 
With output rising in Nigeria and Libya, countries exempt from the deal, and output surging in the United States, which was not part of the agreement, many bulls appear to have thrown in the towel.
 
The market largely shrugged off comments overnight from Iran’s oil minister that members of OPEC are considering deeper cuts in production.
 
A bigger-than-expected cut in US crude stockpiles reported overnight is also barely shifting the dial.

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