WTI Crude Oil Heading To New Lows On High Inventory

Crude oil continued to decline this morning falling another 39 cents to trade at 80.13 while Brent followed suit losing 33 cents to trade at 84.27. On Wednesday morning WTI had rebounded and was climbing but reversed course by midafternoon and then on the release of US inventory prices collapsed.

Oil is extending its collapse into a bear market as producers including Saudi Arabia cut export prices to stimulate demand amid the highest U.S. output in almost 30 years. Production averaged 8.93 million barrels a day in the seven days ended Oct. 17, according to the EIA, the Energy Department’s statistical arm. That’s down 0.2 percent from the previous week, when the U.S. pumped the most since June 1985.

Crude inventories climbed to 377.7 million barrels, the highest level since July, the data showed. Supplies at Cushing, Oklahoma, the nation’s largest oil-storage hub and the delivery point for WTI futures, gained by 953,000 to 20.6 million. Gasoline inventories dropped by 1.3 million barrels, compared with a projected decline of 1.45 million. Distillate fuels, including heating oil and diesel, expanded by 1.05 million barrels to 125.7 million. Oil markets are oversupplied by about 1 million barrels a day, Kamal said by e-mail yesterday, adding that his comments reflected personal views, not Libya’s official position.

Libya’s OPEC governor called for the group to reduce oil output by at least 500,000 barrels a day as its biggest members discount supplies to defend market share rather than cut production to boost prices.

The market is oversupplied by about 1 million barrels a day, Libya’s Samir Kamal said by e-mail yesterday. His comments reflected personal views, not the official Libyan position, he said. They mark the first time a member nation representative is suggesting how much production needs to be reduced after prices entered a bear market.

Brent Sea crude has tumbled about 25 percent since June, as producers including Saudi Arabia cut export prices to stimulate demand amid the highest U.S. output in almost 30 years. Banks including BNP Paribas SA and Bank of America Corp. predict the price rout may be over, in part because they expect OPEC to reduce supply.

Oil prices also fell sharply, pressured by data that showed a second big jump in weekly U.S. crude stockpiles, as well as a rising U.S. dollar and falling equity markets.  U.S. crude futures slipped in Asia on Wednesday to near a two-year low of $79.78 hit last week. Also stressing investor nerves was manufacturing data from China and Europe due later today. Signs of the Chinese and eurozone economies losing momentum have stoked global growth fears this month, and any fresh suggestion of economic weakness is likely to further unnerve investors.