Workers drill a new oil well in a farm field within
sight of houses near the town of Longmont, Colorado
October 14, 2014.
(Reuters) - Oil prices slumped more than 3 percent to
four-year lows on Thursday, with benchmark Brent
crashing below $80 a barrel, after a stockpile surge at
the delivery point for U.S. crude frayed nerves of
traders already worried about an oil glut.
The decline compounded Wednesday's losses stemming
from comments by Saudi Arabia's oil minister that showed
little will by the kingdom to cut output when the
Organization of the Petroleum Exporting Countries meets
on Nov. 27.
Brent settled down $2.46, or 3.1 percent, at $77.92 a
barrel, after plumbing a September 2010 low of $77.83.
U.S. crude finished down $2.97, or 3.9 percent, at
$74.21. In post-settlement trade, it went as low as
$74.07, also a trough from September 2010.
Futures of U.S. gasoline blendstock RBOB and heating
oil fell to four-year lows too, with gasoline breaching
the $2-per-gallon mark.
Crude prices, which have slumped some 30 percent
since June on fears of an oversupplied market, plunged
below support levels of $80 a barrel for Brent and $75
for U.S. crude.
Some market analysts think U.S. crude is on course to
break below $70 a barrel.
"Certainly, $70 seems to be the next major target to
take out," said Andy Lipow, president of Lipow Oil
Associates in Texas. "There is little in the way of
market bears clawing toward that."
The losses came after the U.S. government's Energy
Information Administration said stocks at the Cushing,
Oklahoma, delivery hub for U.S. crude futures rose 1.7
million barrels for the week ended Nov. 7. Gasoline
stocks surged 1.8 million barrels.
Some thought the selloff was overdone as the market
appeared to have overlooked an overall drop of 1.7
million barrels in crude inventories. There was also a
2.8 million-barrel draw in distillate stocks, which
included heating oil, and a spike in refinery
utilization.
"To me, the market’s reaction confirms just how
bearish sentiment is. Even with decent numbers like
these, the market can’t rally,” said Kyle Cooper,
managing director at energy consultancy IAF Advisors in
Houston.
OPEC members meet in Vienna on Nov. 27, when they
will consider how to respond to the price slump over the
past five months. Some have said they want a cut in
output.
Qatar expects to lower oil output to about 500,000
bpd by the end of November from 650,000 bpd at the end
of October and from 800,000 a month before that, an
industry source familiar with the matter said.
But top oil exporter and OPEC's most powerful member,
Saudi Arabia, has refrained from backing a cut,
prompting speculation that it is more concerned with
keeping market share than supporting prices.
"We do not set the oil price. The market sets the
prices," Saudi Oil Minister Ali al-Naimi said on
Wednesday.
(Additional reporting by Christopher Johnson in
London and Jacob Gronholt-Pedersen in Singapore; Editing
by Marguerita Choy and Jessica Resnick-Ault)