Oil hits three-week lows on US stockpiles, OPEC doubts

Oil prices hit the lowest levels since early August this week, beset by supply glut worries after US crude reserves rose for the second straight week.

The market also took a tumble on growing doubts whether OPEC oil producers would agree to cut or freeze output when they meet later this month.

US benchmark West Texas Intermediate (WTI) slid on Thursday to $43.00 per barrel, which was the lowest since August 11.

On the same day, Brent North Sea crude touched a similar trough at $45.32 a barrel.

"A catalyst was the release of US government inventory data, which revealed a second weekly build in crude stocks, keeping them well above average and sustaining concerns about oversupply," Accenture research specialist Damien Cox told AFP.

"Scepticism about possible supply management by producers also helped prices move lower."

On Wednesday, the US government's Department of Energy reported that commercial crude inventories in the world's top oil consumer edged up last week and were now 16 percent higher than the same period last year.

The market had also dived Thursday as Russia suggested it may not be necessary to limit output, denting hopes for its gathering with OPEC producers in Algeria.

Russian President Vladimir Putin has meanwhile urged compromise to find agreement on an oil production freeze to combat a global supply glut.

"We consider that it is the right decision for world markets, that's the first thing," Putin told Bloomberg News in an interview released Friday.

Crude oil has lost one tenth of its value from its August peaks.

Oil had however entered a bull market last month -- a 20 percent rise from recent lows -- on hopes that Russia and OPEC would be able to reach a deal after agreeing to the Algiers gathering.

But doubts have crept in this week after OPEC members Iran and Iraq said they wanted to increase output.

- US jobs data disappoints -

Expectations for a hike in borrowing costs have meanwhile swirled since last Friday when Federal Reserve boss Janet Yellen had indicated the US economy was strong enough for such a move.

That, in turn, fuelled a rally in the dollar, which dented oil prices as it makes the commodity more expensive to anyone holding other currencies.

However, the dollar faltered on Friday as traders digested a key US August jobs report which came in under forecasts, indicating the economy was not clearly strong enough to support a rate hike.

Dealers said the fewer-than-expected 151,000 jobs created last month -- compared to the 190,000 average of the previous three months -- indicated a Fed rate hike is still on the cards but probably not this month.

"Oil recovered momentum to find itself back above $44 on Friday with this being linked to dollar weakness... following a disappointing headline non-farm payrolls reading," said FXTM analyst Jameel Ahmad.

However, he sounded a note of caution over OPEC, which meets informally in Algeria with non-member producers on the sidelines of the International Energy Forum from September 26 to 28.

"It should be kept in mind that concerns remain elevated over the excessive oversupply of oil in the global markets while the fading hopes over OPEC securing a freeze deal in September's informal meeting continue to cap upside gains."

Approaching 1600 GMT on Friday, WTI for October delivery rebounded by $1.33 to $44.49.

Brent for November added a hefty $1.40 to $46.85 compared with the close on Thursday.

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