Worldwide crude oil prices plunged to fresh lows with the price of the Organisation of Petroleum Exporting Countries (OPEC) basket of twelve crudes going below the $40 a barrel level for the first time in 11 years.
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Brent crude oil futures went up 0.41 dollar or 0.93 percent to trade at USD 44.55 a barrel at NYMEX.
Both crude benchmarks saw high levels of activity in early trading as markets looked nervously for direction following the deadly attacks in Paris on Friday.
Goldman Sachs said there remained a downside risk to oil prices “as storage utilization continues to climb”. US commercial crude inventories increased by 300,000 barrels last week, maintaining a total USA commercial crude inventory of 487.3 million barrels.
The Energy Information Administration reported Wednesday that crude stocks rose by 252,000 barrels, lower than the 2 million forecast by analysts but it was still seen as a negative since supplies should be dropping at this time of year.
Since the “Brent crude” variety of the overwhelming majority of foreign heavy oil is much more attractive to refineries (due to its more complex and profitable conversion), the light U.S. West Texas Intermediate (WTI) variety can not replace the refineries’ interrelationships with the aforementioned foreign suppliers.
Opec’s second-biggest producer, Iraq, has started to sell a few crude grades for as little as $30 a barrel, trade sources said, acting as a further drag on futures.
Oil prices have tumbled from a peak of around $102 per barrel in June a year ago, to just below $48 per barrel today.
Oil prices have plunged by more than half since reaching peaks of above $100 a barrel in mid-2014 owing to the supply glut and a slowdown in the global economy, particularly major energy user China. But this requires a price curve in which oil is sufficiently more expensive in the future than for immediate delivery – a market structure known as contango – so that holding costs can be covered. “The oil market remains amply supplied at the moment”, said Gain Capital analyst Fawad Razaqzada.
The US Department of Energy will release its regular weekly oil inventories report on Wednesday.
Oil analysis agency Platts said on Wednesday it will add Qatar’s alShaheen and Abu Dhabi’s Murban crude to its Dubai and Oman benchmarks from January 2016 to boost the liquidity of its price assessment process.
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Zinc was down 2.1 per cent at $US1,587, lead slid 0.9 per cent to $US1,596.5, tin lost 0.3 per cent to $US14,700 and nickel fell 1.2 per cent to $US9,310 a tonne.
