By Lisa Barrington
LONDON (Reuters) – U.S. crude oil fell to its lowest in almost six-and-a-half years on Friday as huge stockpiles and refinery shutdowns heightened concerns about global oversupply and slowing economies in Asia.
Oil had already tumbled more than 3 percent on Thursday, driven by a report that stocks at Cushing, Oklahoma, the delivery point for U.S. crude futures, rose more than 1.3 million barrels in the week to Aug. 11.
U.S. crude (CLc1) was down 24 cents at $ 41.99 a barrel by 1045 GMT. The contract earlier hit an intraday low of $ 41.35, its lowest since March 4, 2009. Brent crude (LCOc1) traded at $ 49.12, down 10 cents and some way off its 2015-low of $ 45.19 reached in January. The front month September Brent contract expires today.
U.S. crude is much weaker than the North Sea benchmark, partly due to refinery outages sapping U.S. demand. The largest of those refineries – BP PLC’s (BP.L) 413,500 barrels per day (bpd) facility in Whiting, Indiana, shut two-thirds of its capacity for repairs that could last a month or more.
Robin Bieber, director and technical analyst at London brokerage PVM Oil Associates, said the U.S. crude oil contract, also know as West Texas Intermediate or WTI, had become somewhat dislocated from Brent:
“The contracts are not all on the same technical page and this causes a lack of clarity,” Bieber said. “WTI could plunge but the rest hold steady.”
Commerzbank analyst Carsten Fritsch said he didn’t expect an accelerated drop in prices, but rather “a slow grind lower”:
“As long as (Whiting) refinery is out of service this will add to stocks in the U.S. which is WTI’s main driver now.”
Goldman Sachs said that a weaker Chinese yuan was putting downward pressure on all commodity markets, signaling a change in global macro-economic conditions.
“We believe the net commodity market effects are bearish,” it said in a note to clients.
Analysts said prices could fall further still unless oil production started to fall, particularly in North America.
“The lowest crude prices in six years might not be enough to put the brakes on the U.S. supply growth. U.S. shale players are actively cutting costs and some players are profitable at less than $ 30 per barrel,” ANZ Bank said.
On the demand side, China’s crude oil imports have so far remained strong as authorities take build up strategic reserves and consumers keep spending despite the slowing economy.
(Editing by Christopher Johnson)