Fri Aug 21, 2015 | 3:03 AM EDT
By Jacob Gronholt-Pedersen
SINGAPORE (Reuters) -
Oil prices resumed their downward trend on Friday pulled lower by weaker global stock markets and a sharp contraction in China's manufacturing activity, with the U.S. benchmark on track for its longest weekly losing streak since 1986.
Activity in China's factory sector shrank at its
fastest pace in almost 6-1/2 years in August as
domestic and export demand dwindled, adding
to worries about lower demand for crude in the
world's second biggest oil consumer.
Asian stocks also fell on Friday, following Wall
Street down as fears took hold of a China-led
deceleration in global growth. [MKTS/GLOB] Key oil benchmarks were trading near 6-1/2
year lows, with the U.S benchmark headed for
its eighth straight weekly decline, the longest
weekly losing streak since 1986.
In late 1985, oil prices slumped to $10 from
around $30 over five months as OPEC raised
output to regain market share following an
increase in non-OPEC production.
BP (BP.L) CEO Bob Dudley said in late-July,
when oil prices were some $8 a barrel higher
than now, that "it does feel like 1986".
U.S. crude for October delivery CLc1 was 46
cents lower at $40.86 a barrel at 0656 GMT.
The September contract CLU5, which expired
on Thursday, ended 34 cents higher.
The U.S. benchmark hit a 6-1/2 year low of $40.21 a barrel on Thursday. Brent LCOc1 was on track for its seventh weekly decline in the past eight, trading 41 cents lower at $46.21 a barrel, after settling 54 cents lower on Thursday.
The dollar .DXY continued retreating on
shrinking expectations of an U.S. interest rate
hike in September, providing some support for
oil prices. U.S. crude inventories continued to rise last week, as imports rose and shale production fell slower than anticipated, despite falling prices.
[EIA/S] "The only silver lining we are seeing coming from the United States is that refining rates remain high and that crude production
continues to fall," Singapore-based Philip
Futures said in a note to clients.
Despite the rout in oil prices, some mutual funds keep plowing money into oil exploration and production companies in the United States in a bet that production will retreat sharply over the next 12 months, setting the stage for a rebound towards $65-70 per barrel.
A glut of U.S. oil is about to repeat itself north of the border, with traders scrambling to secure more storage space in western Canada as crude stockpiles surge to record highs.
Spot prices of Western Canada Select (WCS),
a marker for heavy, diluted bitumen from
Alberta's oil sands sank to a 12-year low near
$20 per barrel.
(Reporting By Jacob Gronholt-Pedersen;
Editing by Michael Perry)
By Jacob Gronholt-Pedersen
SINGAPORE (Reuters) -
Oil prices resumed their downward trend on Friday pulled lower by weaker global stock markets and a sharp contraction in China's manufacturing activity, with the U.S. benchmark on track for its longest weekly losing streak since 1986.
Activity in China's factory sector shrank at its
fastest pace in almost 6-1/2 years in August as
domestic and export demand dwindled, adding
to worries about lower demand for crude in the
world's second biggest oil consumer.
Asian stocks also fell on Friday, following Wall
Street down as fears took hold of a China-led
deceleration in global growth. [MKTS/GLOB] Key oil benchmarks were trading near 6-1/2
year lows, with the U.S benchmark headed for
its eighth straight weekly decline, the longest
weekly losing streak since 1986.
In late 1985, oil prices slumped to $10 from
around $30 over five months as OPEC raised
output to regain market share following an
increase in non-OPEC production.
BP (BP.L) CEO Bob Dudley said in late-July,
when oil prices were some $8 a barrel higher
than now, that "it does feel like 1986".
U.S. crude for October delivery CLc1 was 46
cents lower at $40.86 a barrel at 0656 GMT.
The September contract CLU5, which expired
on Thursday, ended 34 cents higher.
The U.S. benchmark hit a 6-1/2 year low of $40.21 a barrel on Thursday. Brent LCOc1 was on track for its seventh weekly decline in the past eight, trading 41 cents lower at $46.21 a barrel, after settling 54 cents lower on Thursday.
The dollar .DXY continued retreating on
shrinking expectations of an U.S. interest rate
hike in September, providing some support for
oil prices. U.S. crude inventories continued to rise last week, as imports rose and shale production fell slower than anticipated, despite falling prices.
[EIA/S] "The only silver lining we are seeing coming from the United States is that refining rates remain high and that crude production
continues to fall," Singapore-based Philip
Futures said in a note to clients.
Despite the rout in oil prices, some mutual funds keep plowing money into oil exploration and production companies in the United States in a bet that production will retreat sharply over the next 12 months, setting the stage for a rebound towards $65-70 per barrel.
A glut of U.S. oil is about to repeat itself north of the border, with traders scrambling to secure more storage space in western Canada as crude stockpiles surge to record highs.
Spot prices of Western Canada Select (WCS),
a marker for heavy, diluted bitumen from
Alberta's oil sands sank to a 12-year low near
$20 per barrel.
(Reporting By Jacob Gronholt-Pedersen;
Editing by Michael Perry)
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