US oil prices slid towards $34 a barrel on Wednesday, extending losses of nearly 7 percent a day earlier on fresh concerns over the economy and sliding oil demand, which has caused inventories to bloat. Global markets were roiled by fear that Eastern Europe's battered economies would drag down Western banks, while oil traders braced for an eighth consecutive rise in weekly US crude oil stock data.
US crude for March delivery, which expires on Friday, fell 44 cents, or 1.3 percent, to $34.49 a barrel at 0638 GMT, while London Brent crude for April delivery fell 53 cents to $40.50 a barrel. With the expiry of the March contract just days away, the April contract has fallen even faster than the front month, narrowing the gap to around $3.60 on Wednesday versus nearly $8 last week, suggesting traders believe the swollen stocks in Cushing, Oklahoma, may persist.
US stocks slid within striking distance of the November bear-market low on Tuesday, with financial shares sinking to 14-year lows after Moody's Investors Service said banks could be hit by the recession in Eastern Europe. The financial crisis has left much of the world in recession and hammered oil consumption, pulling crude prices from record highs above $147 a barrel hit in July.
But Goldman Sachs said in a note that commodities markets were beginning to show signs of bottoming, even though it advised against direct investment in the asset class due to hefty costs involved in holding positions. US crude oil inventories likely rose for the eighth straight time last week to near an 11-year high, a Reuters poll of analysts showed, with crude stocks seen rising by 2.6 million barrels while gasoline and distillate stocks fell.
The forecasts were issued ahead of data to be released by the American Petroleum Institute later on Wednesday and by the US Energy Information Administration on Thursday. Both reports were delayed a day by the US Presidents' Day holiday this week.
Comments
Comments are closed.