Oil prices fell again on Thursday as supplies rose both in North America and the Middle East, with U.S. contracts hovering slightly above $40 per barrel, levels not seen since the credit crunch of 2009, and globally traded Brent falling below $47.
U.S. West Texas Intermediate (WTI) crude oil already slumped over 4 percent on Wednesday to hit a 6-1/2-year low as a huge unexpected stockpile build in the United States reinforced concerns about a growing global oil glut.
U.S. crude inventories rose 2.6 million barrels last week to 456.21 million barrels, the government’s Energy Information Administration said.
Supplies were also added from Canada, which increased exports to the United States by more than 400,000 barrels per day (bpd) over the past week to 3.39 million bpd, according to a research note by Energy Aspects.
Markets fell further on Thursday in Asian trading hours, with U.S. crude futures CLc1 easing 0.8 percent to $40.48 per barrel at 0630 GMT. Brent LCOc1 was down 35 cents at $46.81 a barrel.
“WTI prices plunged to the lowest level in more than six years after an EIA report showed that U.S. crude stockpiles unexpectedly rose 2.6 million barrels against market expectations for a small decline,” ANZ bank said on Thursday.
“Despite the weak price environment, the biggest OPEC producer, Saudi Arabia, boosted its oil exports,” it added.
Saudi Arabia exported 7.365 million barrels per day (bpd) in June, up from 6.935 million bpd in May, figures published by the Joint Organisations Data Initiative (JODI) showed.
The bearish sentiment is also visible in the long-term derivatives market.
Contracts for delivery of crude oil in the future on the big commodities markets such as the New York Mercantile Exchange (CME.O) and the InterContinental Exchange (ICE.N) show the price of oil for delivery in five years’ time has collapsed in recent months, implying that traders do not expect a price recovery any time soon.
U.S. crude prices for delivery in 2020 cost only about $20 more than they do now, a price difference that falls further when adjusted to expected inflation and interest rates.