February 9, 2016 / 1:21 AM / 2 years ago

Oil down 8 percent on gloomy U.S., global demand outlooks

NEW YORK (Reuters) - Oil prices slid for a fourth straight session on Tuesday and teetered close to 12-1/2-year lows hit last month, after weak demand forecasts from the U.S. government and the western world’s energy watchdog, while weak equities also pressured prices.

“The longs got out, the shorts jumped back in and there was possibly a whole lot of hedging by producers today to sell oil at whatever low price they could,” said Scott Shelton, broker and commodities specialist with ICAP in Durham, North Carolina.

“It’s very difficult for anyone to be positive on this market with the kind of data that’s been coming out.”

Brent crude oil settled down $2.56, or 7.8 percent, at $30.32 a barrel. It was the largest drop in a day for Brent since Sept. 1.

U.S. crude lost $1.75, or 5.9 percent, to finish at $27.94. It fell to $26.19 last week, its lowest since May 2003.

U.S. gasoline settled down 6 percent while heating oil fell nearly 7 percent.

Prices were under pressure throughout the session, but hit intraday lows after the U.S. Energy Information Administration (EIA) lowered its oil demand growth forecast for the next two years.

Investors do not normally watch the quarterly report so intensely, but the fact that it triggered fresh selling reflected deepening nerves across the crude market.

    It came just hours after Paris-based International Energy Agency (IEA) warned the world would remain awash with unwanted oil for most of 2016 as declines in U.S. output take time and OPEC is unlikely to cut a deal with other producers to reduce ballooning output.

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

    Weakness in equity markets also pressured oil. Wall Street's S&P 500 index .SPX was down most of the day, recovering just before oil settled in New York trading.

    After the oil market settled, the American Petroleum Institute (API), an industry group, reported a build of 2.4 million barrels in U.S. crude stockpiles for last week.

    That was lower than the 3.6 million-barrel build predicted by analysts surveyed by Reuters. The EIA issues official stockpile numbers on Wednesday.

    Additional reporting by Amanda Cooper in London; Editing by Marguerita Choy and David Gregorio

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