Petroleum prices slumped to two-week lows on Thursday as global stock markets fell, as a report, showing USA crude inventories rising more than expected, weighed on investor sentiment.
Following a big production increase in the last six months, the oil markets appear to be "adequately supplied for now", but the industry is coming under strain, according to an article in Reuters citing The International Energy Agency.
West Texas Intermediate Crude was trading up 0.31 per cent at $71.19, down more than $3 per barrel from last Friday.
Both benchmarks were headed for their first weekly drop in five weeks, pressured by a big rise in USA inventories and fading concerns about shrinking global supplies due to looming US sanctions on Iran's oil exports. USA crude added 71 cents to $71.68.
"The decline may deepen significantly ahead of USA sanctions - and subsequently as final cargoes are delivered", said the IEA, which advises major oil consumers on energy policy.
Drillers added eight oil rigs in the week to Oct 12, bringing the total count to 869, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday.
'The bearish alarm bells are ringing for next year's oil balance as market players brace for the return of a supply surplus, ' said Stephen Brennock of oil broker PVM.
OPEC spare capacity fell below 1.4 million barrels per day (b/d) in September, the lowest level since December 2016 when global oil inventory levels were much higher, the US Energy Information Administration (EIA) said in its October Short-Term Energy Outlook (STEO), Trend reports.
In the U.S. Gulf of Mexico, producers have cut daily oil production by roughly 42% due to Hurricane Michael, the Bureau of Safety and Environmental Enforcement said.
"The clear risk-off mode that we are seeing across all markets is also hitting oil", said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
Michael crashed ashore Florida on Wednesday as the third most powerful hurricane to strike the USA mainland, leaving seven people least.