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 Oil had already tumbled more than 3 percent on Thursday, driven by a
report that stocks at Cushing, Oklahoma, the delivery point for U.S.
crude futures, rose more than 1.3 million barrels in the week to
Aug. 11.
U.S. crude hit an intraday low of $41.35 a barrel, its lowest since
March 4, 2009, before recovering to $42.13 by 1040 GMT, down 10
cents on the day.
Brent crude traded at $49.21, unchanged from its previous settlement
and some way off its 2015 low of $45.19 reached in January. The
front-month September Brent contract expires on Friday.
U.S. crude is much weaker than the North Sea benchmark, partly due
to refinery outages sapping U.S. demand. The largest of those
refineries - BP's 413,500-barrels-per-day (bpd) facility in Whiting,
Indiana, shut two-thirds of its capacity for repairs that could last
a month or more.
Robin Bieber, director and technical analyst at London brokerage PVM
Oil Associates, said the U.S. crude oil contract, also known as West
Texas Intermediate or WTI, had become somewhat dislocated from
Brent.
"The contracts are not all on the same technical page and this
causes a lack of clarity," Bieber said. "WTI could plunge but the
rest hold steady."
Commerzbank analyst Carsten Fritsch said he didn't expect an
accelerated drop in prices, but rather "a slow grind lower":
"As long as (Whiting) refinery is out of service this will add to
stocks in the U.S., which is WTI's main driver now."
Goldman Sachs said a weaker Chinese yuan was putting downward
pressure on all commodity markets, signaling a change in global
macroeconomic conditions.
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"We believe the net commodity market effects are bearish," it said
in a note to clients.
Analysts said prices could drop further still unless oil production
started to fall, particularly in North America.
"The lowest crude prices in six years might not be enough to put the
brakes on the U.S. supply growth. U.S. shale players are actively
cutting costs and some players are profitable at less than $30 per
barrel," ANZ Bank said.
On the demand side, China's crude oil imports have so far remained
strong as authorities build up strategic reserves and consumers keep
spending despite the slowing economy.
(Editing by Christopher Johnson and Dale Hudson)
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