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Oil hovers near multi-month lows, Brent below $50

Published 06/08/2015, 01:10 pm
Updated 06/08/2015, 01:16 pm
Oil hovers near multi-month lows, Brent below $50
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* Rising U.S. gasoline inventories weigh on prices

* U.S. crude stocks drop more than expected

By Florence Tan

SINGAPORE, Aug 6 (Reuters) - Oil hovered near multi-month lows on Thursday with Brent under $50 a barrel after investors sold crude on worries about rising U.S. gasoline inventories as peak summer demand comes to an end.

Gasoline stocks in the United States rose more than expected, overriding a bullish picture from a larger-than-expected drop in crude stockpiles and pushing prices down overnight to multi-month lows.

"We're talking about September crude runs now and that's pretty much past summer," said Tony Nunan, a risk manager at Mitsubishi Corp.

"The U.S. has (cheap) crude supply and can keep runs high but the rest of the world is not looking so good ... We remain oversupplied and world-wide inventories are high."

September Brent crude LCOc1 gained 12 cents at $49.71 a barrel by 0305 GMT after dropping to $49.02 on Wednesday, the lowest since Jan. 30.

U.S. crude CLc1 edged up 2 cents at $45.17 a barrel, after touching an intraday low of $44.83 in the previous session, the weakest since March 20.

"We are probably getting close to the bottom. At $40, in the longer term, a lot of projects don't make sense," Nunan said.

U.S. crude inventories USOILC=ECI fell 4.41 million barrels, nearly three times more than the 1.5-million-barrel drop analysts had expected, data from the Energy Information Administration (EIA) showed on Wednesday.

Gasoline stocks USOILG=ECI rose by 811,000 barrels, the EIA said, compared with analysts' expectations in a Reuters poll for about a 500,000-barrel drop.

Investors are also eyeing key jobs data due on Friday in the United States that could re-affirm that the Federal Reserve is likely to raise interest rates in September.

A rate hike would likely strengthen the greenback, a negative for dollar-denominated oil because it becomes more expensive for holders of other currencies.

Technical charts showed Brent may retest support at $48.98 a barrel, with a break below that indicating prices could test the next support at $47.71, Reuters market analyst Wang Tao said.

U.S. crude is expected to fall further to $44.31 a barrel as it has pierced below support at $45.17, Wang said.

(Editing by Tom Hogue)

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