By Richard Valdmanis
NEW YORK (Reuters) - U.S. oil prices fell 5.5 percent on Thursday to settle at the lowest point in nearly two months, dragged down by swelling crude stocks in the United States and concerns over the health of the global economy.
U.S. crude dropped $1.96 to settle at $33.98 a barrel, the lowest since December 19 and extending a losing streak that has clipped 17 percent off the price in five days. Brent crude rose 37 cents to $44.65 a barrel.
U.S. crude has been running at a big discount to Brent due to a glut at the main U.S. storage hub in Oklahoma along with supply problems in Nigeria that tend to have a bigger impact on European supplies.
The losses came after the U.S. government reported on Wednesday a seventh straight weekly increase in nationwide crude inventories as the economic crisis crushes business and consumer fuel demand.
Crude oil stockpiles at Cushing, Oklahoma -- the world's biggest storage hub and the delivery point for U.S. crude futures -- rose last week to record levels around 35 million barrels, near operational capacity.
"Much of today's pressure on crude still comes from yesterday's data showing a big jump in U.S. crude supply, including at the NYMEX delivery point in Cushing, Oklahoma," said Andy Lebow, broker at MF Global in New York.
"There is also anticipation that crude stocks will continue to build in the weeks to come," he added.
Encouraging losses Thursday, the U.S. Labor Department said the number of people staying on unemployment benefits rose by 11,000 to a record 4.810 million in the last week of January.
"What that's telling us is the underlying trend is bad and seems to be getting worse. For job losses, February could be worse than January," Nigel Gault, chief U.S. economist at Global Insight in Lexington, Massachusetts, said.
The global economic downturn is taking its toll on oil consumption and supply appears to be outpacing demand in many parts of the world, despite production cuts by members of the Organization of the Petroleum Exporting Countries.
Algerian Oil Minister Chakib Khelil told Reuters on Thursday that there is a 50 percent chance the cartel could agree to deepen cuts when it meets in March, and added that compliance among members is solid.
"We have 85 percent which is unusual for compliance. By meeting time, we will probably have 100 percent," Khelil said.
U.S. oil's losses were further exacerbated by a report Wednesday from the International Energy Agency forecasting global demand would shrink this year by the largest amount since 1982.
Traders said the short-term direction of the market was also being dominated by movements in stock markets, which were lower in New York on Thursday. .N
Brent crude was supported somewhat by news Shell (RDSa.L) may have trouble meeting some oil export obligations due to unrest in the Niger Delta.
(Additional reporting by Christopher Johnson in London, Fayen Wong in Perth; Editing by Marguerita Choy)
No comments:
Post a Comment