Oil slips on slack US demand

Oil price: Slid as Middle East concerns fade

Oil fell towards $108 a barrel on Thursday, extending its longest losing streak in four years, pressured by the prospect of solid global supply and weak gasoline demand in the United States.

Brent and US crude oil futures continued their downward trend that begun about a fortnight ago, as easing geopolitical tension in Iraq and Libya decreased the risk premium from previous weeks.

"The rally of the previous weeks was all on anticipation that there was going to be supply disruptions," Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut, told the news wire.

"You still continue to see some liquidation selling because of evaporating geopolitical risk, but the market is now starting to stabilise."

Brent crude fell 19 cents to $108.09 a barrel by 11:43 am eastern time, down for a ninth session and matching a similar run in May 2010.

It hit a low of $107.76 earlier, the weakest price since 9 May.

US crude fell for a 10th session to $102.10 a barrel, down 19 cents and was set to post its longest stretch of losses since July 1984.

The two benchmarks had climbed to a nine-month high of $115.71 for Brent and $107.26 for US crude last month, as an Islamist insurgency in Iraq raised the specter of oil disruptions from OPEC's second-largest producer.

Concerns over oil shortages from Iraq have since eased, as fighting between Sunni militants and government forces has spared exports from southern oil terminals.

Meanwhile, Libya's output has risen to 350,000 barrels per day due to an increase in production from the El Sharara field, where a protest ended earlier this month.

"It's a combination of profit-taking, the Libya effect and I would say a slight reduction in the risk premium regarding the Iraq situation," said Hans van Cleef, a senior energy economist at ABN Amro in Amsterdam.

While Libya's oil industry hopes life will return to normal, experts say it will take months to ramp up production and more unrest is in prospect as political chaos spreads.

Fuel demand in the United States has been a let-down despite a gradual recovery in the world's largest economy, according to government data.

Gasoline demand over the past four weeks was at 9.04 million bpd, down 0.4% from a year earlier, data from the Energy Information Administration showed on Wednesday.

"We expect gasoline demand to pick up, but so far it has not surpassed late-May or early-June levels," Societe Generale's Michael Wittner said in a note.

However, China, the world's second-largest oil consumer, posted a 10.2% rise in crude imports in the first six months, customs data showed. Analysts attributed the jump in imports to stockpiling.

OPEC expects its share of the world oil market to shrink in 2015 for the third year running, despite an increase in global demand.

Its oil demand next year will average 29.37 million bpd, down 310,000 bpd from 2014, according to its monthly report.

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