Oil drops close to $88 in well-supplied oil market

Brent crude fell to just above $88 a barrel on Tuesday in a well-supplied market as expectations faded that OPEC could cut output in an effort to shore up prices.

The global oil benchmark has declined more than 20 per cent from the 2014 high in June as supplies rose and demand slowed in the United States, Europe and China.

Investors expecting a production cut from OPEC to support prices were disappointed as Saudi Arabia and Kuwait played down the possibility of the Organisation of the Petroleum Exporting Countries reducing output.

OPEC, which produces about 40 per cent of the world’s crude oil, is due to meet in late November to discuss output targets.

Brent crude fell 70 cents a barrel to $88.19 after touching $87.74 on Monday, the lowest since December 2010. The November contract expires on Thursday.

US crude dropped 65 cents a barrel to $85.09 after it pared sharp intraday losses on Monday to settle down 8 cents.

China posted a strong rebound in commodities imports in September, including a 13 per cent rise in crude oil imports compared with August.

Investors are looking ahead to weekly oil inventories data from the United States for price direction.

US commercial crude stocks were forecast to have increased in the week ended October 10th, while refined products likely fell, according to a Reuters survey ahead of the inventory reports out of the world’s biggest oil consumer.

Industry group the American Petroleum Institute (API) will issue its report on Wednesday, and the US Department of Energy's Energy Information Administration (EIA) will follow with its weekly data on Thursday. The reports have been delayed a day due to Monday's Columbus Day holiday.

Reuters