Oil Hits Fresh Seven-Year Low as Global Gut Persists

Reuters

Crude oil prices extended their slide on Thursday to near seven-year lows as traders looked beyond a drop in U.S. crude stockpiles to focus on a global supply glut, while a stronger dollar weighed on commodities.

Continue Reading Below

U.S. gasoline futures were the only bright spot on the petroleum complex, rallying on concerns over a refinery outage and possible cuts in production.

Futures of Brent and U.S. crude's West Texas Intermediate (WTI) struck February 2009 lows for a fourth day in a row in continued fallout from an OPEC meeting last week that abandoned price support measures. Unimpressive U.S. government inventory data from Wednesday added to the drag.

In its latest monthly report on Thursday, the Organization of the Petroleum Exporting Countries forecast that oil supply from countries outside the group - including United States and Russia - would fall by 380,000 barrels per day (bpd) next year, three time more than previously expected.

Despite that, OPEC left its forecast for 2016 world oil demand unchanged at 1.25 million bpd. It said its group output rose by 230,000 bpd in November to 31.7 million bpd.

OPEC's report "fell easily within (the) range of expectations," Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch & Associates, explaining its lack of positive impact.

He also said the weekly drop of 3.6 million barrels in U.S. crude stocks announced by the government on Wednesday was seen as refiner de-stocking before the end of the U.S. tax year. "Additional U.S. commercial crude stock draws will be shrugged off," he added.

Brent was down 57 cents at $39.54 by 11:57 a.m. EST (1657 GMT), hitting a near-seven year low at $39.50.

WTI was down 45 cents at $36.71 a barrel, after reaching a February 2009 low of $36.52.

The dollar rose for the first time in three days, making commodities denominated in the greenback less affordable to users of the euro and other currencies.

U.S. gasoline jumped more than 3 percent after reports that BP's 405,000-bpd Whiting catalytic reformer unit was shut on Wednesday at just before midnight New York time.

"Significantly decreased activity has been observed from the unit since that time," market intelligence firm Genscape said in a report.

The profit for refining a barrel of crude into gasoline <1RBc1-CLc1>, meanwhile, rose to its highest seasonal level since 2012. Traders cited concerns about refiners cutting runs due to weak demand for distillates, which includes diesel, forecast from expectations of a mild winter. (Additional reporting by Simon Falush in London; Editing by Jason Neely, Mark Potter and Marguerita Choy)