Oil down almost 10 percent in two days as hunt for bottom continues
Global oil markets on Tuesday slumped for a fourth straight session as mounting worries about a supply glut pressured crude prices, which have fallen almost 10 percent this week to their lowest since spring 2009.
Traders said the trend for crude seemed lower but that prices could bounce up whenever there is a break in market sentiment. One such moment occurred on Tuesday when weaker-than-expected U.S. economic data briefly pushed the dollar lower. This brought crude off session lows but only for an about an hour, as the downward path resumed.
Refined products such as gasoline RBc1 and heating oil HOc1 also bounced up briefly in morning trade, rallying as investors took profits on short positions. But products later succumbed to the trend, and gasoline settled 2 percent down.
Crude oil prices have plunged more than 55 percent since June, when benchmark Brent traded above $115 a barrel and U.S. crude above $107.
In Tuesday's session, Brent LCOc1 settled down $2.01 at $51.10 a barrel. It earlier fell to $50.52, its lowest since May 2009, and less than a dollar away from breaking below the $50 support.
In the first two days of this week, Brent has dropped $5.32, or almost 10 percent.
U.S. crude CLc1 finished down $2.11, or 4.2 percent, at $47.93, after plumbing an April 2009 low of $47.55.
Brent and U.S. crude extended losses in post-settlement trade after the American Petroleum Institute, an industry group, reported builds in gasoline and distillate stocks last week despite a 4 million-barrel drop in crude stocks. [API/S].
The government's Energy Information Administration will issue official inventory data for last week at 10:30 a.m. ET (1530 GMT) on Wednesday.
"I think the likelihood of seeing $46 to $45 is quite likely," said Phillip Streible, senior market strategist at RJO Futures in Chicago. "People, I think, are further understanding that the U.S. is becoming a powerhouse in creating crude oil and that's not going to change anytime soon."
The sell-off in oil began six months ago on concerns of an oversupply of high quality U.S. shale crude. It accelerated after a meeting of the Organization of Petroleum Exporting Countries in November, when Saudi Arabia ruled out production cuts as a means of boosting prices.
On Tuesday, Saudi Arabia's King Abdullah said in a speech read for him that the country would deal with the challenge posed by lower oil prices "with a firm will," giving no signs the No. 1 crude exporter will cut supplies.
On Monday, the kingdom's announcement of further oil price discounts for its European and U.S. buyers added to the bearish state of oil markets already staggering from Russian output at post-Soviet-era highs and Iraqi oil shipments near 35-year highs.