LONDON – U.S. crude oil steadied on Friday after falling to its lowest in almost 6-1/2 years as huge stockpiles and refinery shutdowns heightened concerns about global oversupply.
Oil had already tumbled more than 3 percent on Thursday, driven by a report that stocks at Cushing, Oklahoma, the delivery point for U.S. crude futures, rose more than 1.3 million barrels in the week to Aug. 11.
U.S. crude <CLc1> hit an intraday low of $41.35 a barrel, its lowest since March 2009, before recovering to $42.86 by 1338 GMT, up 63 cents on the day.
Brent crude <LCOc1> traded at $49.17, down 5 cents and some way off its 2015 low of $45.19 reached in January. The front-month September Brent contract expires on Friday.
U.S. crude is much weaker than the North Sea benchmark, partly due to refinery outages sapping U.S. demand. The largest of those refineries – BP’s <BP.L> 413,500-barrels-per-day (bpd) facility in Whiting, Indiana, shut two-thirds of its capacity for repairs that could last a month or more.
Robin Bieber, director and technical analyst at London brokerage PVM Oil Associates, said the U.S. crude oil contract, also known as West Texas Intermediate or WTI, had become somewhat dislocated from Brent.
“The contracts are not all on the same technical page and this causes a lack of clarity,” Bieber said. “WTI could plunge but the rest hold steady.”
Commerzbank analyst Carsten Fritsch said he didn’t expect an accelerated drop in prices, but rather “a slow grind lower” as long as the Whiting refinery was out of service.
Petromatrix oil analyst Olivier Jakob said WTI could fall further, but Brent was in a consolidation phase: “WTI is still facing some local issues and it could weaken more. Otherwise Brent will start to stabilize.”
On Friday, Citi Group revised down its base case crude oil price outlook to $54 per barrel for Brent in 2015 and $53 in 2016. It cut its U.S. crude outlook to $48 for 2015 and 2016.
Goldman Sachs said a weaker Chinese yuan was putting downward pressure on all commodity markets, signaling a change in global macroeconomic conditions.
“We believe the net commodity market effects are bearish,” it said in a note to clients.
(Editing by Christopher Johnson)
This article was written by Lisa Barrington from Reuters and was legally licensed through the NewsCred publisher network.