Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

CORRECTED-UPDATE 4-U.S. crude oil hits 6-1/2-year low on high stocks, China

Published 14/08/2015, 07:09 pm
© Reuters.  CORRECTED-UPDATE 4-U.S. crude oil hits 6-1/2-year low on high stocks, China
GS
-
BP
-
LCO
-
CL
-

(Corrects time and price in paragraph 3)

* U.S. crude oil futures lowest since March 2009

* Lower yuan puts downward pressure on commodities - Goldman Sachs (NYSE:GS)

* North Sea Brent crude still above 2015 lows

By Lisa Barrington

LONDON, Aug 14 (Reuters) - U.S. crude oil fell to its lowest in almost six-and-a-half years on Friday as huge stockpiles and refinery shutdowns added to 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 30 cents at $41.93 a barrel by 0845 GMT. The contract earlier hit an intraday low of $41.35, its lowest since March 4, 2009. Brent crude LCOc1 traded at $49.00, down 22 cents and some way off its 2015-low of $45.19 reached in January.

U.S. crude is much weaker than the North Sea benchmark, partly due to a spate of refinery outages that has sapped U.S. demand. The largest of those refineries - BP PLC's BP.L 413,500 barrels per day (bpd) facility in Whiting, Indiana, also the biggest in the U.S. Midwest - has been forced to shut two-thirds of its capacity for repairs to a leak 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."

Goldman Sachs said that a weaker Chinese yuan was putting downward pressure on all commodity markets.

"The (yuan) devaluation has been important for commodity markets and we believe it signals that global macro conditions have changed," Goldman Sachs said in a note to clients.

"Even China has now joined the negative feedback loop that is running between commodity deflation, growth and deleveraging trends ... We believe the net commodity market effects are bearish." ID:nL5N10P04P

Analysts said that prices could fall further.

"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 cost 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 advantage of low prices to build up strategic reserves and consumers kept spending despite the slowing economy. (Editing by Christopher Johnson)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.