Crude oil falls to another 12-year low on oversupply gloom

A man filling up his truck at a convenience store in Texas on Jan 7.
A man filling up his truck at a convenience store in Texas on Jan 7.PHOTO: BLOOMBERG

TOKYO (REUTERS) - Crude oil fell in Asian trade on Thursday (Jan 14), with Brent marking another 12-year low amid gloom over a world awash with supply and concerns about global economic growth hitting equity markets.

Brent dropped as far as US$29.73, the lowest since February 2004 and down more than 1.5 per cent. It was down 47 cents at US$29.84 a barrel at 0145 GMT (9.45am Singapore time) and the contract has fallen every trading day this year.

West Texas Intermediate (WTI) erased earlier gains and was down 12 cents at US$30.36 a barrel. It settled at US$30.48 on Wednesday, up 4 cents, the contract's first gain in 2016.

It was the second time in two days for Brent, the global benchmark, to drop below US$30 a barrel after WTI fell below that mark on Tuesday, before recouping some of the losses.

"Perhaps US$30 or just slightly below is acting as a little bit of a floor, but that being said that's a straw in a hay barn in terms of positivity," said Mr Ben le Brun, market analyst at OptionsXpress in Sydney. "The rest of the news is decidedly negative about oil," he said.

A bearish report from the US Energy Information Administration on Tuesday underlined concerns that demand is stagnating as more supply comes to market.

Data showing that crude inventories rose 234,000 barrels last week, much less than expectations, was overshadowed by reported builds of 8.4 million barrels in gasoline and over six million in distillates, which includes diesel and heating oil.

Concerns about the US economy also amplified the gloom and the Standard and Poor's 500 index dipped below 1,900 for the first time since early October.

In Tokyo on Thursday, the Nikkei 225 was down nearly 4 per cent, after data showed core machinery orders fell 14.4 per cent in November from the previous month.