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Oil price tumbles on fears of oversupply

11 May 2017

HONG KONG (AP) - Energy shares led a decline in global stock markets Friday after oil touched its lowest level in almost six months on oversupply concerns.

Brent crude slipped below $47 a barrel in early trading on Friday to reach new five-month lows, having fallen from above $50 the day before - though it later staged a recovery to climb above $48.

USA crude ended the session 4.81 per cent lower at US$45.52 per barrel after falling as much as 5.29 per cent to an intraday bottom of US$45.29, the lowest since Nov 29.

In London, BHP Billiton Ltd. fell 2.7% overnight Thursday and Rio Tinto fell 1.4%.

Back in 2012, the price of a barrel of Brent Crude was over $120 ($127 in March 2012) and had been higher before the Global Financial Crisis really bit.

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Both benchmarks tested major support levels, with U.S. crude falling well below the key price of US$47.23, according to traders and analysts. Support is building within OPEC to extend its oil production cuts by an additional three or six months, senior Gulf officials previously told CNNMoney.

USA light sweet West Texas Intermediate (WTI) crude futures were trading at $45.40 per barrel, down 12 cents, or 0.3 per cent, after a more than 4 per cent drop the previous session. Germany's DAX was down 0.1 percent at 12,633 and Britain's FTSE 100 was up nearly 0.1 percent at 7,249.

Still, gasoline demand for the past four weeks was down 2.7 percent from a year earlier, so stocks of the fuel, at 241.2 million barrels, remained 10 percent higher than the seasonal average over the past decade.

The oil price slide accelerated overnight Thursday after OPEC delegates downplayed the chance that the group and other producing countries (such as Russia) would deepen their output cuts when they meet on May 25.

The concern over rising global supply and stubbornly high inventories effectively wiped out most of the gains made since OPEC announced its first supply cut in eight years.

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Copper CMCU3 rose 0.76 percent to $5,585.00 a ton.

The dollar index.DXY fell 0.18 percent, with the euro EUR= up 0.1 percent to $1.0995.

ENERGY SHARES: Oil company stocks led declines. Markets in Japan and South Korea were closed for holidays. PetroChina, China's biggest oil producer, lost 3.2 percent and Sinopec, the country's largest refiner, fell 2.8 percent. Economists forecast that job-creating bounced back last month after a disappointing March, in the latest sign of USA economic strength supporting the Fed's plans for more interest rate increases this year.

Energy firms were among the main losers in Asian trade on Friday following a plunge in oil prices fueled by fresh global glut concerns, with most equity markets heading for a negative end to the week. The euro edged up to $1.09876 from $1.0984.

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