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Oil heads for seventh weekly loss as supply glut drags

LONDON (Reuters) – Oil prices headed for a seventh straight weekly loss on Friday, with key producers showing no sign of cutting output in the face of a global supply glut.

Global oil benchmarks hit their lowest since 2009 this week and are down more than 50 percent from June levels, with Brent crude futures extending declines on Friday, dropping 50 cents a barrel to $50.46 by 0427 ET.

U.S. crude futures for February delivery were down 12 cents at $48.67 a barrel despite robust U.S. economic data that brightened the outlook for demand.

Brent’s premium to U.S. crude ¬†fell near $1.80 a barrel, the narrowest since October as international seaborne oil markets appear to be under even more pressure than the U.S. domestic market.

“It is another negative week and a reflection of the focus on negative arguments,” said Hans Van Cleef, senior energy economist at Dutch bank ABN Amro.

Supply concerns remained as Saudi Arabia and its Gulf OPEC allies are showing no sign of considering cutting output to boost oil prices even as demand slows globally.

Meanwhile, annual consumer inflation in China remained near the lowest in five years, signaling persistent weakness in the world’s largest energy consumer.

“Without any changes to fundamentals, selling appears largely to be jittery investors looking for supply-demand equilibrium,” ANZ analysts said in a note.

For the first time since 2009, a contract to buy crude oil or any sort of refined product costs less if it is for immediate delivery than for future shipment, giving traders more reason to buy now instead of later.

If recent market history is any guide, Brent prices could mark time around $50 a barrel for another few days before resuming their decline.

Supply is piling up with some of the world’s largest oil traders hiring supertankers this week to store crude at sea.

BNP Paribas has cut 2015 price forecasts for Brent and West Texas Intermediate crude by more than $10 per barrel to $60 a barrel and $55 a barrel respectively.

“Supply issues will dominate demand in terms of fundamental factors, with the market focusing on how the current supply surplus will ultimately resolve itself,” BNP said.

(Additional reporting by Florence Tan in Singapore; Editing by Dale Hudson)

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