Oil traded near the lowest level in more than four months amid speculation a global glut that drove prices into a bear market will be prolonged.
West Texas Intermediate futures fell as much as 0.7 percent in New York after dropping 1.3 percent Wednesday.
US crude stockpiles remain more than 90 million barrels above the five- year seasonal average and production increased for the first time in four weeks, data from the Energy Information Administration show.
Goldman Sachs Group Inc. said the global crude oversupply is running at 2 million barrels a day and storage may be filled by the fall, forcing the market to adjust.
Oil last month slumped the most since 2008 on signs the global surplus was persisting as the US pumped near the fastest rate in three decades and the largest OPEC members produced record volumes.
The Bloomberg Commodity Index, which fell almost 11 percent in July, has resumed its decline.
“While we maintain our near-term WTI target of $45 a barrel, we want to emphasize that the risks remain substantially skewed to the downside, particularly as we enter the shoulder months this autumn,” Goldman analysts including Jeffrey Currie said in the report dated Thursday.
WTI for September delivery fell 23 cents to $44.92 a barrel in electronic trading on the New York Mercantile Exchange at 10:45 a.m. in London. The contract slid 59 cents to $45.15 on Wednesday, the lowest close since March 19.
Brent for September settlement was 4 cents higher at $49.63 a barrel on the London-based ICE Futures Europe exchange. It dropped 40 cents to $49.59 on Wednesday. The European benchmark crude traded at a premium of $4.71 to WTI.
Crude stockpiles in the US, the world’s biggest oil consumer, dropped by 4.4 million barrels to 455.3 million for a second weekly decline, the EIA said Wednesday. Supplies were projected to fall by 1.63 million, according to the median estimate of analysts surveyed by Bloomberg.
U.S. production expanded by 52,000 barrels a day to 9.47 million a day, the first increase in four weeks. Refinery utilization rose by 1 percentage point to 96.1 percent, the highest level since 2005.
About 170 million barrels of crude and products have been added to storage tanks and an additional 50 million barrels to floating storage globally since January, according to the Goldman report. Global crude oversupply has climbed from 1.8 million barrels a day in the first half, Goldman said.
The Bloomberg Commodity Index of 22 raw materials dropped 0.2 percent for a second day of losses. Eighteen of the 22 components, which include gold, have declined at least 20 percent from recent closing highs, meeting the common definition of a bear market.