Oil edges lower to near three-month lows on surplus supply

Oil futures gave up early gains to trade near three-month lows on Friday on a persistent supply glut that has cut prices by up to 13 percent since the start of November.

A gas pump is seen hanging from the ceiling at a petrol station in Seoul June 27, 2011.

U.S. crude West Texas Intermediate (WTI) dipped 11 cents to $40.43 a barrel as of 0731 GMT, after edging up in earlier trades. It ended down 21 cents at $40.54 on Thursday, after dipping to $39.89 during the previous session, its lowest since Aug. 27.

Front-month Brent futures for January lost 6 cents to $44.12 a barrel, after finishing up just 4 cents on Thursday at $44.18.

Crude futures have already lost around 60 percent of their value since mid-2014 as supply exceeds demand by roughly 0.7 million to 2.5 million barrels per day to create a glut that analysts say will last well into 2016.

Market data suggests that oil traders are preparing for another downturn in prices by March 2016, as what is expected to be an unusually warm winter dents demand just as Iran's resurgent crude exports hit global markets after sanctions are ended.

ANZ bank said on Friday: "The weakness in the front end of the curve has pushed the market to deep contango again."

The bank noted the spread between near-month futures and December 2016 contract prices has hit a new record of nearly $8 a barrel.