NEW YORK — Oil prices fell 7 percent as equity markets remained weak, forecasts called for record high U.S. crude stockpiles to develop more, and the latest global energy demand outlooks didn’t look sufficiently strong to eliminate the swelling glut.
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U.S. gasoline futures fell to a 2008 low in front of weekly inventory data likely to show crude and gasoline stocks growing to record highs.
Continuing weakness in equity markets also pressured oil. Wall Street’s S&P 500 index fell almost 1 percent.
Sunday’s talks between Saudi Oil Minister Ali al-Naimi and the Venezuelan counterpart produced no tangible indications of progress on coordinated oil production cuts between OPEC and non-OPEC suppliers.
Oil prices were pressured further by weak demand outlooks issued by the U.S. government’s Energy Information Administration (EIA) and also the Paris-based International Energy Information (IEA).
“The longs have withdrawn from the market and also the sellers have returned in full force,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Brent crude was down US$2.34, or 7.1 percent, at US$30.54 a barrel by 1:15 p.m. ET (1815 GMT).
U.S. crude fell US$1.45, or 5 percent, to US$28.23.
U.S. gasoline futures fell 5 per cent and heating oil was down nearly 7 percent.
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U.S. crude stockpiles likely rose 3.6 million barrels in the week ended Feb. 5, said the most recent Reuters survey ahead of data due at 4:30 p.m. (2130 GMT) from industry group American Petroleum Institute (API). The API data runs before official stockpile numbers on Wednesday from the EIA.
The EIA in a separate set of Tuesday said hello has lowered its oil demand growth forecast for 2016 by 110,000 barrels per day and 2017 by 260,000 bpd.
That report came after another the Paris-based IEA said it did not expect global demand for oil to develop quickly enough to erase the overhang of crude any time soon.
The IEA, the West’s energy watchdog, cut its forecast for 2016 oil demand growth, which now stands at 1.17 million barrels per day (bpd) carrying out a five-year high of 1.Six million in 2015, and reduced its estimate of interest in OPEC crude.
“The IEA report would be a bearish blow, followed by the EIA report which sings from the same hymn sheet,” said Matt Smith, director of commodity research at energy data provider ClipperData.
The world’s largest oil trader, Vitol, said hello expects global oil demand to grow by around A million bpd this year, down from last year’s rate 1.6 million bpd.
? Thomson Reuters 2015
