Oil sags as supply glut weighs

Global oil prices weakened on Tuesday, weighed down by abundant supplies that have plagued the market for months.

Brent North Sea crude for delivery in November dipped seven cents to stand at $49.18 a barrel in afternoon London deals.

US benchmark West Texas Intermediate for delivery in November shed 30 cents to $45.96 a barrel compared with Monday's close.

Prices had rallied Monday, following equity markets higher and finding support from a drop in US drilling activity that could ease the global oversupply.

However, the world's vast oil glut -- which sent prices collapsing by 60 percent between June 2014 and January -- continues to hurt sentiment.

The glut was partly caused by booming shale oil production, while crude prices have also been hurt by faltering demand arising from China's economic slowdown.

"With the regularly repeated signs of an aggressive oversupply... that has acted as the dominant threat to investor sentiment for the past year remaining, I doubt WTI can rally much higher in the short-term," noted Jameel Ahmad, analyst at trading firm FXTM.

Meanwhile in London on Tuesday, oil industry movers and shakers descended on the British capital for the annual Oil & Money conference.

Royal Dutch Shell chief executive Ben van Beurden, addressing delegates at the event, said the global oil market faced a "mixed" outlook.

"I see the first mixed signs for recovery of oil prices," van Beurden said at the conference that concludes Wednesday,

"But with US shale oil being more resilient than we originally thought and a lot of oil still in stock, it will take some more time to rebalance demand and supply.

"After this happens, Saudi Arabia's strategy and cohesion within OPEC will remain key uncertainties."

OPEC, which had previously defended price levels by cutting output when necessary, switched strategy in November 2014 when it opted to leave its production target unchanged.

The cartel has since stuck to this plan, keeping its output target level at 30 million barrels per day, in a Saudi-led strategy aimed at squeezing out high-cost US shale producers.

Traders were meanwhile awaiting Wednesday's report on US commercial crude inventories, a closely watched indicator of demand in the world's top consuming nation.

The data will probably show that inventories rose by two million barrels in the week to October 2, a Bloomberg News survey showed, indicating slowing demand.

burs-rfj/bcp/pvh