Oil prices fell to their lowest level in more than 12 years as crude stockpiles at the delivery point for New York futures hit record highs, Bloomberg reported.
West Texas Intermediate futures sank to the lowest since May 2003, breaching the level reached in January, and the contango between front-month and second-month contracts, an indicator of traders’ bearishness, increased to the widest in five years.
Oil is down 29 percent this year on speculation a global glut will persist as Iranian exports increase after the removal of sanctions and US crude inventories remain swollen.
US stockpiles are more than 130 million barrels above the five-year average, even after dropping by 754,000 barrels last week, Energy Information Administration data shows.
“Oil has become so disconnected to the cost of getting it from the ground that now we’re trading on round numbers,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania.
“The next target is US$25 and then we’ll head to US$20. Oil in the teens is a real prospect in the near future.”
WTI for March delivery dropped US$1.24, or 4.5 percent, to settle at US$26.21 a barrel on the New York Mercantile Exchange.
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