NEW YORK: Oil prices fell about 3 percent yesterday to four-year lows after Chinese data showed further economic slowdown and US government data showed US crude stockpiles surged at the delivery point for crude futures.
Brent was down $2.03 at $78.35 a barrel by 1919 GMT, after plumbing a September 2010 low of $77.99. US crude fell $2.45 to $74.73 a barrels, after going as low as $74.53, also a trough from September 2010.
The declines compounded losses from Wednesday after comments by the Saudi Oil Minister raised fears the world’s top oil exporter will not agree to output cuts at the Organisation of the Petroleum Exporting Countries’ (Opec) meeting on November 27.
The US government’s Energy Information Administration said stocks at the Cushing, Oklahoma, delivery hub for US crude rose 1.7 million barrels for the week ended November 7, while gasoline stocks surged 1.8 million barrels.
Those numbers overshadowed the overall drop of 1.7 million barrels in crude inventories and a surge in refinery runs and a 2.8 million-barrel draw in distillate stocks. “To me, the market’s reaction confirms just how bearish sentiment is. Even with decent numbers like these, the market can’t rally,” said Kyle Cooper, managing director at IAF Advisors in Houston.
Heating oil also fell about 3 percent and gasoline blendstock RBOB tumbled 4 percent after the inventory data. Oil prices has slumped some 30 percent since Brent hit a June high above $115 on fears of an oil glut.
Worries about No 2 economy China added to the market’s woes after data showing slower factory expansion and a near 13-year low in investment growth.
China’s economy lost momentum in October, with factory growth dipping and investment growth hitting a near 13-year low, reinforcing expectations of a slower increase in fuel demand.
Developing economies had been a major support for oil over the past decade, but demand is now failing to keep up with increasing supply from North American shale production.
Demand for oil from members of the Opec will drop to 29.2 million barrels per day (bpd) next year, almost 1 million bpd less than current output, the cartel forecast this week.
But the most powerful Opec member, Saudi Arabia, has refrained from backing a cut, prompting speculation that it is more concerned with keeping market share than supporting prices. “We do not set the oil price. The market sets the prices,” Saudi Oil Minister Ali al-Naimi said on Wednesday.
Commerzbank oil and commodities analyst Carsten Fritsch said some traders understood his comment to mean that Saudi Arabia would let prices fall further. “That is sort of benign neglect — at least that is what the market thinks,” Fritsch said. Reuters
