NEW YORK (Reuters) - Brent crude ended 2 percent lower on Wednesday after falling below $30 a barrel for the first time since April 2004 as a growing stocks of oil in the United States stoked market fears about demand.
Both Brent and U.S. crude futures saw highs early in the day of more than $1 above Tuesday’s closing price on upbeat Chinese economic data earlier in the session.
But U.S. government data showing builds in crude, gasoline and diesel supplies augmented fears that demand will stagnate as global markets contend with oversupply.
Concerns about U.S. economic uncertainty also amplified the declines, the Standard and Poors 500 index dipped below 1900 for the first time since early October. [.N]
Brent LCOc1 fell to a new 12-year low at $29.96 a barrel before settling at $30.31 a barrel, down 55 cents or 1.8 percent.
U.S. crude CLc1 settled at $30.48, up 4 cents or 0.1 percent after dropping as low as $30.10. On Tuesday, it dropped as low as $29.93, which was last seen in December 2003.
Brent, which normally trades at a premium to U.S. crude CL-LCO1=R, flipped into a discount just after 2:00 p.m. EST (1900 GMT), as it tested and broke beneath the $30 level.
Data showing that crude inventories USOILC=ECI rose 234,000 barrels last week, much less than expectations, was overshadowed by reported builds of 8.4 million barrels in gasoline USOILG=ECI and over 6 million in distillates, which includes diesel and heating oil USOILD=ECI. [EIA/S]
“Overall, it’s a bearish report. I think today’s inventory report is all about products...The long awaited massive decline in crude production is not starting again,” said Dominic Chirichella, senior partner at Energy Management Institute in New York.
This was a second week of huge builds in refined fuel with gasoline surging the most since 1993 in the previous week.
“Last week’s build was massive, and this week’s was much larger than the seasonal norm,” said John Saucer, Vice President at Mobius Risk Group in Houston.
The dynamics of supply have shifted as diesel stockpiles have surged past year-ago levels, indicating a products surplus, Saucer added.
Analysts at Morgan Stanley also warned that a rise in demand for crude could be lower than previously expected.
“Any slowing in the rate of demand growth could delay the timing of rebalancing and ultimately a price recovery,” they said in a research note.
The potential for the calling of an emergency OPEC meeting also weakened on Wednesday when Iran’s oil minister was quoted as saying he had not received any request for such a gathering.
Nigeria’s oil minister said on Tuesday that a “couple” of OPEC members had asked for an emergency meeting.
Additional reporting by Karolin Schaps and Christopher Johnson in London and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy