Oil slides 4 percent on U.S. stock build, OPEC worry

Wed Dec 2, 2015 4:05pm EST
 
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices tumbled more than 4 percent on Wednesday as surging U.S. stockpiles and a rallying dollar prompted traders to dump crude contracts amid signs the world's largest oil producers will not cut production when they meet this week.

Warmer-than-usual weather in the Northeastern United States, a major market for heating oil, also weighed on the petroleum complex.

U.S. crude's West Texas Intermediate (WTI) futures hit contract lows after government data showed a 10th straight week in crude builds.

Brent futures approached new lows since March 2009, with the Organization of the Petroleum Exporting Countries (OPEC) widely expected to uphold at its meeting in Vienna on Friday a decision from last year to pump oil vigorously to protect market share from non-OPEC members like the United States and Russia.

The dollar's .DXY surge to 12-1/2-year highs further pressured prices for oil and other commodities denominated in the greenback.[USD/]

"From the looks of it, we could be trading below $40 a barrel by the time OPEC concludes on Friday," said Tariq Zahir at New York's Tyche Capital Advisors, which is holding short positions in WTI through spread contracts.

Brent LCOc1 settled down $1.95, or 4.4 percent, at $42.49 a barrel. It hit a session low of $42.43, just 20 cents off from the 6-1/2-year low it struck in August.

WTI CLc1 finished the session down $1.91, or 4.6 percent, at $39.94, before returning to above $40 in post-settlement. Its low for the day was $39.84, a bottom for its front-month January contract CLF6.   Continued...

 
Plants are pictured near an oil pump, owned by oil company Rosneft, in the settlement of Akhtyrskaya in Krasnodar region, southern Russia, December 21, 2014. REUTERS/Eduard Korniyenko