Oil tumbles after brief rebound; Brent back below $60

Thu Dec 18, 2014 3:18pm EST
 
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By Barani Krishnan

NEW YORK (Reuters) - Global crude oil prices slumped anew on Thursday, a day after a short-covering rally, as traders placed fresh bets the market would resume a six-month rout on worries about a supply glut.

Benchmark Brent and U.S. crude tumbled $2 a barrel each in late trading after initially extending Wednesday's short-covering, which lifted oil prices by more than $3.

With Brent back below the psychologically-key level of $60 a barrel and U.S. crude under $55, traders braced for more selling in a market that has lost about half its value since June.

"We're continuing to search for a bottom and might even see another significant drop before the year-end," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.

While the market seemed to slide on renewed worries about oversupply, traders said some of the selling could have been due to position squaring ahead of Friday's expiry of the January front-month contract CLF05 in U.S. crude.

Some cited a Bloomberg report about a Nigerian port workers union suspending a strike, although workers in that dock union were only involved in container shipping in Lagos, not oil ports.

The slump set in at midmorning and accelerated in the last 30 minutes of trade.

"Liquidity (was) at its highest at the open and close; lots of systems use (the) market on close orders to enter (and) exit," said Chandravir Ahuja at Kolmar Americas in Bridgeport, Connecticut.   Continued...

 
A customer uses a petrol nozzle to fill up his tank in a gas station in Nice August 27, 2012. REUTERS/Eric Gaillard