Oil at 7-year low as IEA warns of worse glut, U.S. stays warm
NEW YORK - Oil futures extended their tumble with little pause on Friday, with crude prices hitting their worst levels since the 2008/9 credit crunch, after the International Energy Agency (IEA) warned that global oversupply could worsen next yea...
NEW YORK - Oil futures extended their tumble with little pause on Friday, with crude prices hitting their worst levels since the 2008/9 credit crunch, after the International Energy Agency (IEA) warned that global oversupply could worsen next year.
Mild pre-winter weather that reduced heating demand and a plummeting U.S. stock market ahead of a widely expected interest rate hike this month added to the drag.
Brent crude futures slipped below $38 a barrel for the first time since December 2008, trading down $1.69, or 4 percent, at $38.04 by 11:47 a.m. EST (1647 GMT) after a session low at $37.93.
U.S. crude's West Texas Intermediate futures entered the $35 territory for the first time since February 2009. WTI was 96 cents, or 2.3 percent, lower at $35.80, hitting an intraday low at $35.67.
"The WTI and Brent markets are trending at this point with no real interest from anyone to buy," said Scott Shelton, broker and commodities specialist at ICAP in Durham, North Carolina.
"The forecast remains incredibly warm for the U.S. That's a large drag on demand and means less demand for distillates and more for export, which drags down the rest of the world as well."
U.S. weather forecasts call for warmer-than-normal temperatures through Christmas that would curb heating demand, boosting U.S. gasoline futures higher than heating oil prices in December for the first time in at least five years.
Gasoline's premium to heating oil for the January contracts <1RBc1-HOc1> widened as the heating oil contract slumped almost 6 percent while gasoline fell 0.5 percent.
Baker Hughes, an industry firm, will issue at 1:00 p.m. (1800 GMT) its calculation for this week's U.S. oil drilling rig count.
The IEA, which advises developed nations on energy, warned that demand growth was starting to slow.
"Consumption is likely to have peaked in the third quarter and demand growth is expected to slow to a still-healthy 1.2 million bpd (barrels per day) in 2016, as support from sharply falling oil prices begins to fade," the energy watchdog said in its monthly oil report.