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CORRECTED-Oil prices drop, demand seen sagging towards year-end

Published 26/10/2015, 01:53 pm
© Reuters.  CORRECTED-Oil prices drop, demand seen sagging towards year-end
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(Corrects 2nd bullet to say that speculators cut U.S. crude long positions, not short)

* Energy Aspects sees 0.8 mln bpd demand fall for Q4

* Speculators cut U.S. crude long positions

By Henning Gloystein

SINGAPORE, Oct 26 (Reuters) - Crude oil prices edged down in early Asian trading on Monday as a weak demand outlook means oversupply will likely remain in place for months and as speculators cut their bets on rising prices.

Front-month U.S. crude futures CLc1 were trading at $44.58 per barrel at 0035 GMT, 2 cents below their last close and 12.5 percent lower than their October peak.

Internationally traded Brent LCOc1 was 4 cents lower at $47.95 a barrel, almost 11.5 percent below its monthly high.

ANZ bank said that it expected prices to remain low for the remainder of this year and that speculators were also cutting their positions betting on higher prices. urn:newsml:reuters.com:*:nL1N12N1QL

"Speculators are cutting bets on rising oil prices. Net speculative (U.S.) long positions declined by 13,841 contracts for the week ending 20 October," the bank said.

"We remain cautious on commodity prices into year-end given weak demand conditions."

On the demand side, research firm Energy Aspects said in its quarterly outlook that it "forecast a sharp slowdown in global oil demand across Q4 15 at 0.8 million barrels per day, which marks the slowest pace of growth in five quarters".

Energy Aspects said that the ongoing oversupply in crude oil was starting to spill into the market for refined products, with a product stock-build of 0.6 million barrels per day seen in the third quarter.

Rising inventories as well as a mild winter expected for Europe and North America as a result of El Nino would likely lead to reduced refinery production and, by extension, lower use of crude oil by refiners, Energy Aspects said, adding that global oil markets were "still some way from rebalancing".

Meanwhile traders are waiting for Germany's Ifo business climate sentiment for October to be published at 0900 GMT, as well as U.S. new home sales figures for September at 1400 GMT.

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