U.S. crude futures extended their losses into a third session and hit a more than two-month low on Friday, dragged down by a relentless climb in oil stockpiles that has triggered a 10 percent drop in prices since the start of November. There are signs that traders are preparing for more price falls, with the number of options taken to sell crude futures if prices fall to $40 or even $25 per barrel in coming months soaring. U.S. crude futures were at $41.52 a barrel at 0619 GMT, off the day's low of $41.38 - the weakest since Aug. 27. On Thursday, the benchmark closed down almost 3 percent at $41.54 on a 4.2 million barrel crude inventory rise. "The trend is ... down. It looks very bearish," said Oystein Berentsen, managing director of crude oil at Strong Petrochemical in Singapore. Brent crude was at $44.05 a barrel, virtually unchanged from the previous day but close to August lows. "A year-end recovery in commodity prices remains unlikely with a stronger US$ and EM (emerging market) growth concerns," ANZ bank said. Oil markets have been dogged by oversupply, estimated to be between 0.7 and 2.5 million barrels of oil being produced a day above demand, which has resulted in prices falling by almost two-thirds since June 2014. The glut is a result of high production by most major producers, including the Organization of the Petroleum Exporting Countries (OPEC), but also Russia and North America. OPEC said it expects an oil surplus to extend into 2016, albeit at a lower rate. The group said it pumped 31.38 million barrels per day (bpd) last month, down 256,000 bpd from September, in the first decline since March. Investment bank Jefferies said that it expected the crude glut to spill into the refined products sector. "We continue to expect the focus of the oil markets to shift to the surplus of refined products, and OPEC highlighted the 210 million barrel inventory overhang in the OECD relative to the five-year average - only the second time over the last 10 years that inventories have exceeded the 5-year average by greater than 150 million barrels," it said. On the demand side, an economic slowdown in Asia, led by the region's two biggest economies, China and Japan, has led to concerns about slowing demand, although consumption has so far held up.
