Oil hits a 13 year low, prices rally after plumbing new depths

Oil hits a 13 year low, prices rally after plumbing new depths

US oil prices hit a new 13-year low and then rebounded to unchanged in late trading as both oversupply and the threat of co-ordinated output cuts spooked the market in both directions.

Down by about $3.50 per barrel over the three prior sessions, US benchmark West Texas Intermediate for delivery in March dived another $1.24 (4.5 percent) to $26.21 a barrel, its lowest close since May 2003.

In London, Brent North Sea crude for April, the European oil benchmark, dropped to $30.06 a barrel, down 78 cents (2.6 percent)from Wednesday’s settlement.

“We’re seeing some … downtrend in the global economy,” said Carl Larry of Frost & Sullivan. “There’s a lack of recovery around the world. That’s keeping pressure on the oil market right now.”

“As long as demand is going to stay low and the economy is going to stay weak, we’re going to see low oil prices maintained,” he added.
“Global petroleum markets remain under pressure on Thursday, with investors increasingly fearful of recession,” said Tim Evans of Citi Futures.

Analysts said sentiment was marred also by a report this week from the Organization of the Petroleum Exporting Countries that showed the cartel’s production rose by about 130,000 barrels a day in January.

“With the fundamentals of an unrelenting oversupply still in place and the conflict of interest between OPEC members pumping record high levels… low oil prices may be here to stay for an extended period,” said Lukman Otunuga, research analyst at trading group FXTM.

Sportact Editors and Wire Services