Oil prices fell more than 2 percent on Thursday, heading for their sharpest weekly loss since January, as investors brushed aside talk that OPEC might freeze production and focused on a growing glut from U.S. crude stockpiles.
Energy monitoring service Genscape's report of a 714,282-barrel drawdown at the Cushing, Oklahoma, delivery point for U.S. crude futures during the week ended on Aug. 30 did little to bolster sentiment, traders said.
Investors focused instead on Wednesday's government data showing a 2.3 million-barrel build in U.S. crude stocks in the last week, more than double what the market had expected. Inventories of distillates, which include diesel and heating oil, rose nearly 10 times as much as forecast, the data from the U.S. Energy Information Administration showed.
"The high U.S. inventory data suggest oversupply will remain for longer than expected," said Hans van Cleef, senior energy economist at ABN AMRO Bank N.V. in Amsterdam.
"On top of that, anticipation of a higher dollar if the Fed starts to hike rates is negative for oil prices. And there's also uncertainty about the likelihood of OPEC/non-OPEC action at the end of the month."