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Oil slumps to six-year low as US production seen filling tanks
[MELBOURNE] Oil fell for a fifth day, trading at the lowest intraday price in six years, amid speculation that record crude inventories in the US may begin to strain the country's storage capacity.
Futures slid as much as 2.8 per cent in New York after declining 9.6 per cent in the week through March 13, the most since December. Rising supply may fill tanks, the International Energy Agency said on Friday, boosting estimates for US oil production in 2015 as drill rig cutbacks fail to slow output. Prices haven't bottomed yet, according to former Federal Reserve Chairman Alan Greenspan.
Oil capped a fourth weekly loss on Friday as US output and stockpiles expanded to the highest levels in more than three decades, exacerbating a glut that drove prices almost 50 per cent lower last year. Demand is strengthening, according to Saudi Arabia, the world's biggest crude exporter and largest member of the Organization of Petroleum Exporting Countries.
"We've got this ongoing increase in inventory with no cut in production, despite the drop in the number of shale oil rigs," Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. "We are seeing downside momentum now develop in the market."
West Texas Intermediate for April delivery dropped as much as $1.27 to $43.57 a barrel in electronic trading on the New York Mercantile Exchange, the lowest intraday price since March 2009. The contract was at $43.84 at 9:58 a.m. Sydney time. The volume of all futures traded was at the 100-day average. Prices have decreased 18 per cent this year.
Brent for April settlement fell as much as $1.33 to $53.34 a barrel on the London-based ICE Futures Europe exchange. The contract, which expires on Monday, declined 4.2 per cent to $54.67 on March 13. The European benchmark crude was at a premium of $9.60 to WTI, from $9.83 on Friday.