Oil tumbled 4 percent to its lowest point in a year as dealers focused on swelling US crude stockpiles and forecasts of a mild winter in the world's top consumer. US light crude settled down $2.50 at $56.26 a barrel, the lowest settlement since November 18, 2005. London Brent crude fell $3.07 at $58.54.
Crude fell on news of bulging inventories at Cushing, Oklahoma, the delivery point of the US oil futures contract and a key Midwest transit hub. "With Cushing full, longs are bailing out because they don't want to take delivery," said Nauman Barakat, senior vice president at Macquarie Futures USA.
Rising US crude oil stocks - which last week stood 13.8 million barrels above year-ago levels according to government data - have helped push prices from record highs over $78 a barrel in July.
Growing crude inventories in consumer nations prompted oil cartel Opec last month to agree to cut production by 1.2 million barrels per day (bpd) starting November 1. But data from oil tanker tracker Petrologistics showed the producer group pumping 27.5 million bpd in November, well over targets of around 26.3 million bpd for the 10 members participating in the cuts.
Analysts also cited profit-taking ahead of the expiry of the front-month December US crude futures contract later on Thursday, as well as to forecasts of mild US weather that could cut heating demand.
"Traders are trying to get ahead of the expiry rush now instead of waiting 'til tomorrow. The gasoline market is pretty mushy and we're seeing some warm temperature expectations for the Northeast, which limits the upside for heating oil," said Jim Ritterbusch.
The National Weather Service forecast warmer-than-normal weather for the US Northeast, the world's top heating oil market, from December through February. Other forecasts are mixed on temperatures for the region.
Prices rose on Wednesday, ending a three-day slide, after US distillates and gasoline inventories fell sharply last week amid lower refinery output and strong demand.
Distillates stocks in the US fell by 3.6 million barrels last week, nine times more than forecasts, while gasoline supplies dropped by an unseasonably high 3.7 million barrels, the Energy Information Administration (EIA) said. Total US oil demand is up 4.8 percent from a year ago, the data showed. Demand for distillates is up 9.5 percent.
US crude oil stocks rose 1.3 million barrels, the third consecutive weekly rise, as refinery utilisation unexpectedly slipped due to unplanned outages and maintenance.
Comments
Comments are closed.