Oil: Price falls below US$58, supplies swell

Oil prices fell below US$58 on Friday to the lowest level since July as swelling fuel stocks eased consumer fears of tight winter supplies.

US light crude oil was 35 cents lower at US$57.45 a barrel at 1547 GMT, off a session low of US$56.93, the weakest since July 21.

London Brent was off 64 cents at US$55.04 a barrel.

US oil prices have lost around US$3, or five per cent, since the start of the week, and are more than US$13 below a late-August record of US$70.85 touched in the wake of hurricane damage.

On Thursday they fell below a key technical indicator, the 200-day moving average, for the first time since 2002. Analysts said that could trigger a deeper selloff by funds who base decisions to buy or sell on chart analysis.

"The gap lower below the 200-day moving average is noteworthy since the market has not been below this.... since 2002," said Phil Roberts of Barclays Capital.

The market has also been weakened by signs of slower oil demand growth, rising stocks and mild weather.

Prices are are still up around a third since the start of the year and more bullish analysts say there could be a strong rally if sudden cold temperatures spur fourth quarter demand.

Further fuelling the bulls, the US Treasury Department said lower petrol prices in early November and an improving jobs market had helped to bolster US consumer sentiment.

But in the immediate term, oil stocks are higher than the same time a year ago in the United States and Europe and the Organisation of the Petroleum Exporting Countries has said there were no takers for an extra two million barrels per day of crude it has volunteered if needed.

"No one took it and that means there is no demand and that is also showing in the dropping price of oil," Qatari Oil Minister Abdullah al-Attiyah said on Friday.

The cartel next meets on December 12 in Kuwait to reconsider its output policy.

Opec's reference crude basket price dropped to US$51.30 on Thursday, the latest available number, only just above the US$50 a barrel level that Opec ministers have said they would seek to defend.

- REUTERS