Global oil prices deepened a three-month rout on Thursday to hit their lowest since mid-2012, fueled by growing concerns over weak demand, abundant supply and signs that Saudi Arabia is in no hurry to cut output.
U.S. crude rebounded after falling below $90 for the first time since April last year as traders focused on data showing a sharp drop in stocks at the Cushing, Oklahoma, pricing hub as well as a reported decrease in U.S. unemployment claims.
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Brent crude for November delivery also ended well off the day's low, settling 74 cents lower at $93.42. It earlier sank to $91.55, its lowest since June 2012.
U.S. November crude settled up 28 cents at $91.01 per barrel, after earlier sinking to $88.18, its lowest intraday level since April 2013. The turnaround came after industry group Genscape reported a 1.7 million-barrel drop in Cushing stockpiles over the four days since Sept. 26.
"The snap back in U.S. prices suggests that we are getting close to a bottom," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut. "Whether we see more lows will be the real question."
Brent's premium over U.S. crude
Prices have tumbled since June as supply from key producing regions, including the United States and Middle East, remained strong and economic data from Europe and Asia hinted at weak demand.
Sharp cuts in Saudi Arabia's oil sale price to Asian customers on Wednesday was the clearest sign yet that the world's largest exporter is trying to compete for crude market share, pushing prices sharply lower.
Some analysts said a cut in production from the Organization of the Petroleum Exporting Countries (OPEC) at its meeting next month was the only move that could enable a price recovery.
On Thursday, some OPEC delegates said it was time for the group to consider cutting output in November, but core Gulf members continued to bet that a seasonal pick-up in winter demand would revive prices.
A midday slide in the U.S. dollar also helped revive oil prices after European Central Bank President Mario Draghi gave no indication of an imminent stimulus program through the purchase of sovereign bonds.
Monthly U.S. employment data due on Friday is expected expect to show growth in the labor force.
Brent prices are down 19 percent from their June peak, nearing bear market territory, but some traders said the risk was now shifting to the upside.
"I don't think we have much potential to keep going lower," said Carl Larry, head of consultancy Oil Outlooks. "We are at the bottom of the range and there is a lot of room to go up."
(Reporting by Edward McAllister in New York, Libby George and Sam Wilkin in London and Manolo Serapio Jr. in Singapore; Editing by Marguerita Choy and Alden Bentley)
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