Oil prices have fallen dramatically over the last two years from their highs in mid-2014, when a barrel of oil was trading at US$100.
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WTI crude plumbed $39.86, its lowest since April 20, trading $1.51, or 3.6 percent, lower at $40.09.
USA crude closed below US$40 a barrel Tuesday, erasing early gains as persistent worries of a glut offset the boost from a weak dollar early in the session.
West Texas Intermediate for September delivery was at $40.08 a barrel on the New York Mercantile Exchange, up 2 cents, at 1:58 p.m. Hong Kong time.
USA commercial crude oil stocks rose 1.413 million barrels to 522.546 million barrels the week ended July 29, EIA said.
“Oil prices rallied after the EIA weekly report showed gasoline inventories declined the most at this time of the year for at least five years”, ANZ bank said.
United States crude stockpiles probably dropped by 1.75 million barrels last week, according to a Bloomberg survey before a report from the Energy Information Administration today.
The inability of gasoline stocks to erase the amount of excess barrels in storage relative to historical levels so far this summer has been a factor behind oil’s slide.
The price for Brent crude oil gained 2 percent to start the day at $42.98 per barrel.
Still, China surpassed South Korea as the top Asian buyer of North Sea Forties crude this year, while trading house Trafigura was aggressively targeting China’s newest buyers by extending credit to two of the country’s independent refiners.
The fall in prices raises the possibility that the nascent recovery that energy companies hoped would resurrect them could take much longer to arrive. However in recent weeks, they have come under renewed pressure due to increased USA oil drilling activities, Libya’s expected return to the export market, and the possible output increase by OPEC members Iraq and Iran.
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Before the slump below $40, speculators, including hedge funds, added the equivalent of 56 million barrels of extra short positions in the three main Brent and WTI futures and options contracts in the week ending July 26.
