US crude oil fell below $44 a barrel for the first time since April 2009 on Thursday while benchmark Brent sharply pared early gains after data showing additions to already record-high US oil inventories. Oil prices had risen broadly earlier in the session after preliminary US weekly jobless claims data hit a nearly 15-year low, indicating further strength in the world's largest economy.
But crude futures in New York were near a six-year low by midmorning after a report from oil services firm Genscape, which a market source said showed fresh builds of 1.6 million barrels at the Cushing, Oklahoma delivery point for US crude in the period of January 23 through January 27.
Inventories of US crude were already at record highs for the week ended January 23, according to government data issued on Wednesday. Last week's build alone was almost 9 million barrels, taking stockpiles to nearly 407 million, the highest level since the government began keeping such records in 1982.
"There are absolutely very few reasons to buy crude oil now and the only path I see from here is lower," said James Williams, energy economist at WTRG Economics in London, Arkansas. US crude futures' front-month contract was down 64 cents at $43.81 a barrel by 11:29 am ET (1629 GMT), after falling to $43.58 earlier. Front-month Brent showed a 10 cent gain at $48.57 a barrel, off its session high of $49.24.
The spread between the two crude oils was its largest since December 29, with Brent fetching a premium of more than $4.70 a barrel due to the weaker fundamentals in US crude. The current "contango" market structure in both Brent and WTI, where forward month contracts are pricier to nearby oil, is also giving traders an incentive to short prompt crude and buy forward contracts for storage in the hope of delivering those for a profit later.
Oil prices have tumbled about 60 percent since June, with losses accelerating from November onward when the Organisation of the Petroleum Exporting Countries refused to cut its output to shore up prices. Opec's dominant member and top oil exporter Saudi Arabia has repeatedly rebuffed calls from other Opec producers such as Venezuela and Algeria in recent months to reconsider the November decision. The Opec secretary-general said this week the seven-month long sell-off in oil may have run its course and prices could rebound.