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 U.S. crude dipped below the $40 threshold following weekly data that
showed U.S. energy firms added two oil drilling rigs last week, the
fifth increase in a row. The rise in the number of rigs emerging
after a second quarter lull in prices is adding to concerns U.S.
shale production is proving slow to respond to falling prices,
prolonging a global glut. [RIG/U]
"Everyone is still looking at it saying 'Wow, you still don't have
production coming down,'" said Tariq Zahir, founder at Tyche Capital
in Laurel Hollow, New York.
U.S. October crude <CLc1> settled 87 cents, or 2.1 percent, lower at
$40.45 a barrel, having touched a new 6-1/2-year low of $39.86 a
barrel. Front-month U.S. crude has fallen 33 percent over eight
consecutive weeks of losses, the longest such losing streak since
1986.
It pared some losses late in the trading session, as U.S. RBOB
gasoline futures <RBc1> rebounded from a contract low, on news of a
fire in a gasoline-making unit at PBF Energy Inc's 182,000 barrels
per day Delaware City, Delaware, refinery.
Brent oil <LCOc1> ended $1.16, or 2.5 percent, lower at $45.46 a
barrel. It hit a low of $45.07 and threatened to break below $45 a
barrel for the first time since March 2009.
Energy markets slid early in the day as world stock and currency
markets joined an extended rout across raw materials this week, a
slump accelerated on Friday by data showing activity in China's
factory sector, a huge user of many commodities, shrank at its
fastest pace in almost 6-1/2 years in August.
With deepening gloom over demand growth from the world's
second-biggest oil user, and expectations for a significant build-up
in surplus oil stocks this autumn, dealers said most oil traders
were unwilling to fight the tide.
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"The market is stuck in a relentless downtrend," said Robin Bieber,
a director at London brokerage PVM Oil Associates.
"The trend is down - stick with it."
Oil market speculators cut their bullish bets on U.S. crude to the
lowest level in five years, reducing combined futures and options
positions in New York and London by 14,884 contracts to 89,035 in
the week to Aug. 18, the U.S. Commodity Futures Trading Commission
said. [CFTC/]
The current collapse in oil prices, the second this year, has raised
alarm within the Organization of the Petroleum Exporting Countries
(OPEC), including some of its core Gulf members. However, there is
no indication they will reverse their policy of keeping production
wide open to defend market share, delegates told Reuters this week.
(Additional reporting by Christopher Johnson in London and Jacob
Gronholt-Pedersen in Singapore; Editing by Marguerita Choy and Alden
Bentley)
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