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Oil prices drop in Asia on oversupply fears

SINGAPORE: Oil prices dipped in Asia on Wednesday as traders anticipated an increase in US crude inventories when weekly data from the Energy Information Agency is released later in the day.

US benchmark West Texas Intermediate for delivery in December, a new contract, eased 42 cents to $45.87.

Brent North Sea crude for December was 29 cents lower at $48.42 a barrel.

Bernard Aw, market strategist at IG markets in Singapore, said traders had “renewed concerns” over the worsening oversupply problem.

“(The) American Petroleum Institute reported that US crude inventories may have expanded by around seven million barrels last week, which gave credence to the expectations of increased stockpiling ahead of official Energy Information Agency data”, Aw told AFP.

A build-up in the inventories data by the EIA for the week ending October 16 would indicate softer demand, in turn dampening prices.

“The overall picture for oil remains unchanged. The oversupply issue is expected to stay for a while longer until global demand picks up,” Aw added.

Traders are also wary of the return of Iranian oil supplies into the market as Tehran and world powers begin to implement a deal aimed at curbing Iran’s nuclear programme in exchange for the lifting of crippling economic sanctions.

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