Rising US stocks push crude prices to a fresh 6-year low of $42 a barrel
14 Aug 2015
Crude oil prices fell to a new six-year low of $42.23 a barrel on Thursday helped by rising dollar and US crude stocks coupled with worries of sagging global economic growth.
The market was also influenced by a major US refinery outage amidst increasing crude inventories.
US benchmark light sweet crude for September delivery fell $1.07, or 2.5 per cent, to $42.23 a barrel, slipping to its lowest point since 3 March 2009.
Crude oil prices, which have been in a tailspin over the past 14 months amidst rising US production of shale oil and OPEC's unwillingness to cut back on production, have led to a supply surge.
In India, the price of the Indian basket of crude was ruling at $49.52 on Thursday, a bit higher from $49.15 the previous day, figures published by the Petroleum Planning and Analysis Cell (PPAC) showed.
In rupee terms, the price of Indian basket of crude increased to Rs3,214.84 per bbl on Thursday compared to Rs3,186.39 per barrel on Wednesday.
The Indian rupee closed weaker at 64.92 per dollar on Thursday against 64.83 per dollar on Wednesday.
US crude oil prices fell back below $42 a barrel to prices not seen since March 2009 on Friday, as rising US stockpiles added to concerns about oversupply and a demand slump due to slowing economies in Asia.
Oil prices initially rose in early Asian trade following a sharp and sudden fall below $42, and after briefly recovering dipped back below that level around 0330 GMT to be nearly a third below their 2015-highs from last May.
Crude prices tumbled more than 3 per cent on Thursday as a big rise in key US stockpiles added to concerns over a global glut.
Oil traders expect prices to fall further as US crude fell 0.6 per cent to $41.98 in Asian trading, above a low $41.35, helping a downward momentum to prices.
Brent futures were trading at $49.22 a barrel, flat from their last settlement and still some way off from their 2015-low of $45.19.
The slowing demand in China amidst the slowing on its economy and weakening yuan also weighed on the market.
''WTI prices fell sharply to a six-year low amid rising concerns around China's economic slowdown,'' ANZ bank said on Friday, adding that further price falls were likely.
''The lowest crude prices in six years might not be enough to put the brakes on the US supply growth. US shale players are actively cutting cost and some players are profitable at less than $30 per barrel.''
The market is sustaining on the still strong Chinese demand for crude oil as authorities took advantage of cheap oil to build up strategic reserves and consumers kept spending.
Japan and India are other major factors that determine market.
Any cutback in consumption by India and Japan could also affect oil demand negatively, plunging prices further.