Oil tumbles; U.S. crude prices near six-year low on record stockpiles

Wed Jan 28, 2015 3:30pm EST
 
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By Barani Krishnan

NEW YORK (Reuters) - Oil slumped on Wednesday, with U.S. crude prices at near six-year lows, after the government reported record-high inventories in the United States that raised anxieties about the global oil glut that had pressured the market since last summer.

The U.S. Energy Information Administration (EIA) said domestic crude oil stocks rose by almost 9 million barrels last week to reach nearly 407 million, their highest since the government began keeping records in 1982.

A Reuters poll on Tuesday had forecast a build of just above 4 million barrels for the week to Jan. 23. The American Petroleum Institute, an industry group, had estimated a far bigger growth of nearly 13 million barrels.

Oil prices, lifted by a weaker dollar in the previous session, tumbled anew on the stockpile data.

U.S. crude's front-month contract CLc1 settled down $1.78, or almost 4 percent, at $44.45 a barrel. It sank to as low as $44.08 before the close, marking a bottom since April 2009. Open interest in the front-month remained near record highs for a fifth straight day, according to Reuters data.

Benchmark Brent crude LCOc1 closed down $1.13, or 2.3 percent, at $48.47, after a session low at $48.29.

The spread between the two crude oils CL-LCO1=R was its largest in a month, with Brent fetching a premium of about $4 a barrel due to the weaker fundamentals in U.S. crude.

Traders expected oil prices to come under further pressure in coming days despite the EIA report citing positives like a near 3 million barrel drop in gasoline stocks and almost 4 million barrel decline in diesel and heating oil inventories. [EIA/S]   Continued...

 
Fuel prices are seen displayed on a fuel pump at PetroChina's solar-powered Yizhuang gas station in Beijing January 9, 2015.  REUTERS/Kim Kyung-Hoon