Oil tumbles to six year lows

Anxiety hovers on investors regarding slowdown in global economy, US crude oil prices come near to key $40 level

Photo by: Reuters
Photo by: Reuters

A car is filled with gasoline at a gas station pump in Carlsbad, California August 4, 2015

US crude oil prices fell to almost $40 a barrel on Thursday, their lowest since the global financial crisis of 2009, as supplies rose in North America and the Middle East, filling stockpiles to record levels.

Oil has lost a third of its value since June on high US production, record crude pumping in the Middle East and concern about falling demand in Asian economies.

All the main oil futures contracts looked to be heading lower, PVM Oil Associates director and technical analyst Robin Bieber said.

"The trend is down and vicious," Bieber said in a brokerage note.

US crude oil was up 10 cents at $40.90 a barrel, after hitting a new 6-1/2-year intraday low of $40.21.

The US crude front September contract expires on Thursday and has seen intraday volatility as market participants exit their positions.

The US crude October contract hit an intraday low of $40.50 on Thursday.

Brent crude futures, the global oil benchmark, were down 30 cents at $46.86 a barrel, still some way off their 2015 low of $45.19 traded in January.

US crude inventories rose 2.6 million barrels last week to 456.21 million barrels, the government's Energy Information Administration said.

Markets had been expecting a stock draw and the news pushed WTI down more than 4 percent on Wednesday.

Stockpiles rose partly because a US refinery closed for repairs last week, but also because imports rose to their highest level since April.

Canada increased exports to the United States by more than 400,000 barrels per day (bpd) over the past week to 3.39 million bpd, an Energy Aspects research note said.

But US crude oil production has also fallen by more than 250,000 bpd since the start of June.

OPEC continues to pump record levels of oil, adding to the global oil glut.

Saudi Arabia exported 7.365 million bpd in June, up from 6.935 million bpd in May, industry data showed.

In the latest sign of Saudi Arabia's attempt to secure market share, Egypt said on Thursday it agreed a $1.4 billion three-month oil products deal with state-owned Saudi Aramco to begin in September.