By Barani Krishnan
NEW YORK (Reuters) – U.S. crude settled at a more than six-year low on Tuesday after China’s currency devaluation raised questions about oil demand in the No. 2 consumer and a new OPEC estimate showed non-member producers are likely to keep output high despite low prices.
A BP refinery outage in Whiting, Indiana, that could last at least a month, idling some 240,000 barrels per day of crude distillation, also weighed on oil prices, traders said.
U.S. crude (CLc1) fell $ 1.88, or more than 4 percent, to$ 43.08 a barrel, its lowest settlement since March 2009, and about $ 1 above the 2015 contract low on March 18.
Brent (LCOc1) fell $ 1.23, or 2.4 percent, to $ 49.18 a barrel, paring more than half of its gains in a rally on Monday.
The market continued to weaken in post-settlement trade after the American Petroleum Institute (API), an industry group, reported a smaller-than-expected drawdown in U.S. crude inventories last week. [API/S]
“It’s time to sell any and all rallies,” said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York, who bets on crude hitting $ 30 a barrel or lower.
China devalued its yuan currency (CNY=SAEC) by nearly 2 percent after a run of poor economic data, guiding the currency to a near three-year low.
The Organization of the Petroleum Exporting Countries projected that crude supplies from countries outside the group will rise by 90,000 bpd this year, a sign that crude’s price collapse was taking longer than expected to hit U.S. shale drillers and other competing sources.
A global oil oversupply since last summer, led by stubbornly strong U.S. shale crude output and record production by Middle East producers, has driven prices down from June 2014 highs above $ 100 a barrel.
This year so far, U.S. crude has lost almost 20 percent, extending its 46 percent drop in 2014. Brent has fallen 15 percent, adding to last year’s 48 percent tumble.
Weekly declines in U.S. crude inventories over the past two weeks have not helped. The API reported on Tuesday that U.S. crude stockpiles fell by 847,000 barrels last week. Analysts polled by Reuters had expected a larger drawdown of 1.8 million barrels. [EIA/S]
Official data on stockpiles are due on Wednesday at 10:30 a.m. (1430 GMT).
(Additional reporting by Ron Bousso in London and Henning Gloystein in Singapore; Editing by Bill Rigby, Marguerita Choy and Peter Galloway)