(Photo: Bloomberg)
(Photo: Bloomberg)

As US oil storage jumps most in 30 years, Brent oil sinks below $60

  • West Texas Intermediate crude entered a bear market and Brent tumbled
  • The global benchmark fell as low as $59.45, the lowest since January

New York: Brent crude futures tumbled below $60 a barrel after a report showed US crude and fuel inventories ballooning by the most in almost 30 years, feeding fears of a glut as trade disputes threaten demand.

The global benchmark fell as low as $59.45, the lowest since January, after the US government data showed America’s total petroleum stockpiles grew by about 22 million barrels last week, the biggest jump going back to 1990. The US crude production also set a record, while imports climbed.

“I wouldn’t be surprised to see a real meltdown in the prices today,’’ Matt Sallee, a portfolio manager at Tortoise Capital Advisors LLC, said. ‘‘Until something changes the mood, which maybe would be a breakthrough in trade, I don’t see any reason crude is going to improve over the next week.’’

Brent for August settlement dropped $1.69, or 2.7%, to $60.28 a barrel on the ICE Futures Europe exchange at 12:55 pm in New York. Earlier, it fell as much as 4.1% to touch the lowest level since 15 January.

The US West Texas Intermediate futures for July slid as much as 5.4% to $50.60 a barrel on the New York Mercantile Exchange. West Texas Intermediate crude entered a bear market and Brent tumbled below $60 after US petroleum inventories ballooned, raising fears of a glut as trade disputes threaten demand.

Both grades dangled on the edge of bear market territory, down about 20% since reaching yearly highs six weeks ago. A breakdown in trade talks between the US and China and threats of new American tariffs against Mexico have stoked fears about a world economy that’s already showing signs of weakness.

Still, the price drop has also raised the chances that the Organization of Petroleum Exporting Countries and its partners will extend production curbs past a June deadline. OPEC Secretary-General Mohammad Barkindo told an investment conference in New York on Wednesday that the group will take the current “economic bearishness" into account when it meets in coming weeks.

“We could be looking at crude going down and testing some of the support levels' of the January lows, Marshall Steeves, energy markets analyst at Informa Economics in New York, said in an interview. A drop below $50 for WTI could trigger automatic selling programs that would accelerate the decline further, he said.

“It’s the perfect storm, in a way, of increased supply coupled with perceptions of slowing demand growth,' Steeves said.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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