Oil Prices Near Six-Year Lows ahead of U.S. Energy Report

Oil prices dipped on Wednesday, trading near six-year lows ahead of the latest U.S. energy report after jitters over China's faltering economy spurred heavy losses this week, analysts said. 

U.S. benchmark West Texas Intermediate for October delivery fell 13 cents to $39.18 in Asian trading, while Brent crude for October eased 13 cents to $43.08 in late-morning trade. 

Both contracts gained on bargain-hunting Tuesday, after plummeting to their lowest levels since early 2009 a day earlier as investors fret about falling demand in the face of a world supply glut. 

"U.S. crude inventories continue to be the weekly constant mover for oil prices in this period of stagnant fundamentals," said Daniel Ang, investment analyst at Phillip Futures in Singapore. 

"If inventories turn out lower than estimates, we may see prices get more support and vice versa," he added.

Industry group American Petroleum Institute reportedly said Tuesday that U.S. crude reserves shrank by 7.3 million barrels in the week to August 21.

The numbers signaled healthy demand in the world's top crude consumer ahead of the more closely watched official stockpiles report from the U.S. Energy Information Administration later Wednesday. 

Oil prices have come under pressure from concerns that China's slowing economy will curb demand for the commodities that have helped feed its astonishing growth over the past three decades.

The devaluation of the yuan two weeks ago fuelled economic fears, sparking a slump in world equities sending commodities, as measured by the Bloomberg Commodity Index of 22 raw materials, to a 16-year-low on Monday. 

Losses continued in Shanghai shares on Wednesday, while other Asian markets were mixed, after China's central bank cut its benchmark lending and deposit interest rates in a bid to boost confidence.

"Although this did not revive the markets, it did put a stop to the bleeding and markets remain quiet at the start of the day," Ang said.