Oil prices tumble 7% as fears of record high U.S. stockpiles grow

NEW YORK — Oil prices fell 7 per cent on Tuesday as equity markets remained weak, forecasts required record high U.S. crude stockpiles to grow more, and also the latest global energy demand outlooks didn’t look sufficiently strong to eliminate the swelling glut.

Canadian energy companies selling off 'jewels in the crown' to help keep bleeding oilsands afloat

Firms are sacrificing other parts of the business to keep higher-cost oilsands production going and safeguard the billions already invested in multi-decade projects

Read more

U.S. gasoline futures fell to some 2008 low ahead of weekly inventory data expected to show crude and gasoline stocks growing to record highs.

Continuing weakness in equity markets also pressured oil. Wall Street’s S&P 500 index fell almost 1 per cent.

Sunday’s talks between Saudi Oil Minister Ali al-Naimi and the Venezuelan counterpart produced no tangible indications of progress on coordinated oil production cuts between OPEC and non-OPEC suppliers.

Oil prices were pressured further by weak demand outlooks issued by the U.S. government’s Energy Information Administration (EIA) and the Paris-based International Energy Information (IEA).

“The longs have withdrawn from the market and also the sellers have returned entirely force,” said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Brent crude was down US$2.34, or 7.1 per cent, at US$30.54 a barrel by 1:15 p.m. ET (1815 GMT).

U.S. crude fell US$1.45, or 5 percent, to US$28.23.

U.S. gasoline futures fell 5 per cent and heating oil was down nearly 7 percent.

Related

‘Zombie’ stocks haunt oilpatch, but buyers not biting in worst market in generationOil tycoon T. Boone Pickens cashes out of crude as worst market in decades drags on

U.S. crude stockpiles likely rose 3.6 million barrels in the week ended Feb. 5, said the latest Reuters survey in front of data due at 4:30 p.m. (2130 GMT) from industry group American Petroleum Institute (API). The API data runs before official stockpile numbers on Wednesday in the EIA.

The EIA in a separate report on Tuesday said hello has lowered its oil demand growth forecast for 2016 by 110,000 barrels per day and 2017 by 260,000 bpd.

That report came after another the Paris-based IEA said it did not expect global demand for oil to develop quickly enough to erase the overhang of crude in the near future.

The IEA, the West’s energy watchdog, cut its forecast for 2016 oil demand growth, which now stands at 1.17 million barrels each day (bpd) following a five-year high of 1.6 million in 2015, and reduced its estimate of interest in OPEC crude.

“The IEA report was a bearish blow, accompanied by the EIA report which sings in the same hymn sheet,” said Matt Smith, director of commodity research at energy data provider ClipperData.

The world’s largest oil trader, Vitol, said hello expects global oil demand to develop by around A million bpd this year, down from last year’s rate 1.6 million bpd.

? Thomson Reuters 2015