Oil dives anew, falling 5 percent on Goldman downgrade, outages

Mon Jan 12, 2015 3:48pm EST
 
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By Samantha Sunne

NEW YORK (Reuters) - Oil fell 5 percent to its lowest in nearly six years on Monday, extending the second-deepest rout on record, after Goldman Sachs warned that prices would fall further and Gulf oil producers showed no sign of cutting output.

An unusual spate of major refinery glitches across the U.S. East and Midwest added to the concerns, threatening to accelerate a buildup of surplus crude.

Brent LCOc1 fell $2.68, or more than 5 percent, to settle at $47.43 a barrel, its third-largest one-day decline since 2011 and its lowest close since March 2009. The decline was the 10th in the past 12 sessions.

U.S. crude CLc1 settled down $2.29 at $46.07, leading losses across the complex. Gasoline RBc1 and ultra-low sulphur diesel (ULSD) HOc1 futures fell by around 3 percent as refinery outages spurred some prompt buying.

"I figured we’d see $40 in the near term, but everything seems to be happening quicker than expected,” Tariq Zahir of Tyche Capital Advisors.

Prices were relatively stable last week, but that respite ended abruptly when Goldman slashed its three-month forecasts for Brent to $42 a barrel from $80. It cut its outlook for the U.S. futures contract to $41 from $70.

The unrelenting rout, which has wiped nearly 60 percent off prices since June, shows no sign of letting up, with many traders giving up attempts to predict a bottom even amid growing signs that U.S. shale drillers are hitting the brakes.

The number of rigs drilling for oil in North Dakota fell by eight to the lowest since 2010.   Continued...

 
A man fills up his car at a petrol station in Rome January 6, 2015. REUTERS/Max Rossi