Brent oil extends slump to 2-year low

NEW YORK — Benchmark Brent crude dropped to a two-year low on Thursday, falling for a sixth straight session as increasing supply and signs of weakening demand countered worries that conflicts in the Middle East could curb output.

Oil prices fell in tandem early in the day, but US futures broke higher during morning trade in New York after triggering technical support levels. Its sharp rebound from a 16-month low lowered Brent's premium over US crude to a little more than $5 a barrel, its smallest since July.

Some traders linked the bounce in US crude to news that Russia said air strikes against Islamist militants in Syria without a UN Security Council mandate would be an act of aggression.

"Russia's comments may slow the president's plan on getting rid of (the Islamic State militants) and could keep Iraq's production slowed or in danger," said Phil Flynn, analyst at Price Futures Group in Chicago.

Others said the bounce was a sign that markets may be oversold after Brent slid more than 5 per cent in six days.

Brent for October was down 66 cents at $97.38 a barrel at 11:38 a.m. EDT It fell as low as $96.72, its weakest since July 2012.

US crude was up 35 cents at $92.17 a barrel, turning higher after sliding to $90.43, its lowest since May 2013.

Brent hit a high above $115 in June as Islamist insurgents swept across northern Iraq, taking control of several oilfields, but prices have now fallen more than 15 per cent from their highs as supply from other countries has increased and demand has remained tepid.