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US oil ends down 1.5%, at $48.45 a barrel; lowest since March 31

Oil rigs just south of town extract crude in Taft, California.
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Oil rigs just south of town extract crude in Taft, California.

Oil closed at its lowest since March on Thursday after the dollar trimmed early losses and on concerns about ample global supply and demand for petroleum.

U.S. crude for September futures settled down 74 cents, or 1.5 percent, at $48.45 a barrel—the lowest since March 31.

Brent crude was down 90 cents at $55.25 a barrel, having traded as high as $56.53. It fell to $55.10 on July 7.

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"The dollar recovered from its lows and there is just a negative mood in commodities and for oil there is the worry that the global economy is going to affect demand," said Phil Flynn, analyst at Price Futures Group in Chicago.

The weaker dollar as the euro strengthened after Greece approved a second set of reforms needed to avert bankruptcy, supported oil early but the U.S. currency trimmed losses after a report showing tumbling jobless claims in the United States.

A weaker U.S. dollar makes greenback-denominated oil less expensive for consumers using other currencies.

The number of Americans filing new applications for unemployment benefits last week fell to its lowest level since 1973, suggesting the labor market continues a solid pace for job growth.

Both U.S. and Brent crude are on pace to post double-digit percentage monthly losses.

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Brent's premium to U.S. crude seesawed but increased to more than $7 a barrel intraday.

Ample supply continues to weigh on oil futures.

U.S. crude oil stocks rose 2.5 million barrels last week, according to Wednesday's report from the Energy Information Administration (EIA), trumping expectations for a drop of 2.3 million barrels and keeping stocks above the five-year average.

The supply glut looks set to grow as Iran's nuclear deal with the West is expected to release millions of barrels of additional supply into the market.

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Global surpluses and concern about weakness in China's economy sent copper and aluminum to two-week lows on Thursday.

The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was down 1.01 percent.

"We will be keeping a watch on the copper market (for) anecdotal evidence of a slowing in China's economic growth," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.

Ritterbusch pointed to the recent correlation between slumping copper and U.S. crude futures.