Oil heads for eighth straight week of falls

Oil headed for its eighth straight weekly decline in Asia Friday, as sharp falls in equities added to worries lacklustre global economic growth will hurt energy demand in an oversupplied market.

US benchmark West Texas Intermediate (WTI) for October delivery, a new contract, lost 54 cents to $40.78 a barrel in afternoon trade, while Brent crude for October tumbled 62 cents to $46.00 a barrel.

The WTI September contract closed 34 cents higher at $41.14 in New York on Thursday, scraping off recent six and a half year lows.

"Oil prices continue to be plagued by the supply glut problem," said Bernard Aw, market strategist at IG Markets in Singapore.

"Sharp falls in global equities, particularly US shares, further contributed to worries that global growth would be sluggish. This suggests that demand for energy may remain tepid," he told AFP.

Asian shares fell on Friday, continuing a global sell-off in equities that hit Wall Street overnight and saw the Dow reach its lowest level this year as concerns about the health of the world economy snowballed. 

Analysts fear a slowdown in China, the world's second-biggest economy, could drag on global growth and curb energy demand -- bad news for oil prices at a time when markets are already oversupplied with crude.

Oil has managed to hold above the key $40 a barrel mark, but US banking giant Citigroup said on Wednesday prices could fall to $32 a barrel, a multi-year low last seen in 2008.

Investors will be watching the weekly US oil rig count, due on Friday, to see if a slump in crude prices has started to dampen production in the world's top consumer.  

"If we would to see any relief for crude prices, it has to come from production cuts," Aw said.

The United States and producers from the Organization of the Petroleum Exporting Countries have decided against cutting high production levels despite falling prices as they fight over market share.