Investing.com - Oil prices fell back towards seven-year lows on Thursday, as ongoing jitters over a global supply glut coupled with a broadly stronger U.S. dollar weighed.
On the ICE Futures Exchange in London, Brent oil for February delivery dropped 24 cents, or 0.64%, to trade at $37.15 a barrel during European morning hours.
A day earlier, London-traded Brent plunged $1.34, or 3.41%, as worries that a global supply glut may stick around for longer than anticipated continued to weigh. Brent sank to $36.75, a level not seen since the depths of the 2008 global financial crisis.
Brent oil prices are on track to post an annual decline of 35% in 2015, as oversupply concerns dominated market sentiment for most of the year.
Elsewhere, crude oil for delivery in January on the New York Mercantile Exchange shed 36 cents, or 1.03%, to trade at $35.16 a barrel.
On Wednesday, Nymex futures tumbled $1.83, or 4.9%, after the U.S. Energy Information Administration said crude oil inventories increased by 4.8 million barrels last week. Market analysts' expected a crude-stock drop of 1.4 million barrels.
At 490.7 million barrels, total U.S. crude stockpiles remain near levels not seen for this time of year in at least the last 80 years.
U.S. oil futures are down 33% so far this year amid worries over ample domestic supplies.
Oil futures have fallen sharply this month after the Organization of the Petroleum Exporting Countries failed to agree on output targets to reduce a glut of oversupply on global energy markets.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share.
Meanwhile, the spread between the Brent and the WTI crude contracts stood at $1.99, compared to $2.47 by close of trade on Tuesday.
The price gap between the two benchmarks has narrowed to the smallest level in years, signaling that the U.S. oil market is likely to grow tighter following Congress' decision to lift the ban on domestic oil exports, while a global glut gets worse.
A broadly stronger U.S. dollar further weighed on oil. The dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was at 98.70, after hitting highs of 99.00 overnight, the most since December 3, after the Federal Reserve raised U.S. interest rates for the first time in a almost a decade.
Commenting on the decision, Fed Chair Janet Yellen said that further rate hikes would be gradual and data dependent.
The U.S. is to release a weekly report on initial jobless claims at 8:30AM Eastern Time Thursday, as well as data on the Philadelphia Fed manufacturing index for December, as traders look for further indications on the strength of the economy.
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