Oil down 8 percent on gloomy U.S., global demand outlooks | Reuters - Firstpost
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Oil down 8 percent on gloomy U.S., global demand outlooks | Reuters

Updated: Feb 10, 2016 02:45 IST

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NEW YORK 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 LCOc1 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 CLc1 fell $1.75, or 5.9 percent, to finish at $27.94.

U.S. gasoline futures RBc1 fell 6 percent and heating oil HOc1 was down nearly 7 percent.

Prices were under pressure throughout the session, but hit intraday lows after the U.S. government'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.

U.S. crude settled well below $30 a barrel while gasoline fell to a 2008 low ahead of weekly inventory data expected to show crude and gasoline stocks growing to record highs.

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.

U.S. crude stockpiles likely rose 3.6 million barrels in the week ended Feb. 5, said a Reuters survey ahead 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 from the EIA.

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

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