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Oil dives again as US stockpiles jump
[New York] Oil prices sank on Thursday after the US government reported a big jump in US crude-oil inventories, reinforcing worries about the long-running global oversupply.
After falling more than US$1 on Wednesday, US benchmark West Texas Intermediate for delivery in December dropped US$1.18, or 2.7 per cent, to US$41.75 a barrel on the New York Mercantile Exchange, a fresh low since late August.
Brent North Sea crude for December delivery, the global benchmark for oil, finished trade at US$44.06 a barrel in London, down US$1.75 (3.8 per cent) from Wednesday's closing level.
The US Department of Energy reported that commercial crude inventories last week grew by 4.2 million barrels, far higher than analyst expectations of an increase of 1.3 million barrels.
The increase brought US stockpiles to less than five million barrels from their record high, and US crude-oil production continued to ramp up, the DoE said.
"Production remains at pretty good level here in the US and across the world," said Andy Lipow of Lipow Oil Associates. "The market remains under pressure as it sees crude inventories rising for another week."
Commerzbank analysts said the renewed price weakness ratchets up the pressure on Opec producers, especially kingpin Saudi Arabia.
Ecuador, the cartel's smallest member, demanded a cut in Opec production during a meeting in the Saudi Arabian capital Riyadh this week, they said.
"Remarks made by representatives of Saudi Arabia and Kuwait do not lead one to expect any change to the current Opec strategy, which aims to defend market shares even if this means putting up with low prices," Commerzbank said.
The 12-member Organisation of the Petroleum Exporting Countries is scheduled to meet on December 4 in Vienna.
Opec's decision in November 2014 to maintain high output levels despite the glut has contributed to prices plunging from above US$100 a barrel in mid-2014.