NEW YORK - Oil prices slumped more than 3 per cent to four-year lows on Thursday, with benchmark Brent crashing below $80 a barrel, after a stockpile surge at the delivery point for US crude frayed nerves of traders already worried about an oil glut.
The decline compounded Wednesday's losses stemming from comments by Saudi Arabia's oil minister that showed little will by the kingdom to cut output when the Organisation of the Petroleum Exporting Countries meets on Nov. 27.
Brent settled down $2.46, or 3.1 per cent, at $77.92 a barrel, after plumbing a September 2010 low of $77.83.
US crude finished down $2.97, or 3.9 per cent, at $74.21. In post-settlement trade, it went as low as $74.07, also a trough from September 2010.
Futures of US gasoline blendstock RBOB and heating oil fell to four-year lows too, with gasoline breaching the $2-per-gallon mark.
Crude prices, which have slumped some 30 per cent since June on fears of an oversupplied market, plunged below support levels of $80 a barrel for Brent and $75 for US crude.
Some market analysts think US crude is on course to break below $70 a barrel.
"Certainly, $70 seems to be the next major target to take out," said Andy Lipow, president of Lipow Oil Associates in Texas. "There is little in the way of market bears clawing toward that."
The losses came after the US government's Energy Information Administration said stocks at the Cushing, Oklahoma, delivery hub for US crude futures rose 1.7 million barrels for the week ended Nov. 7. Gasoline stocks surged 1.8 million barrels.
Some thought the selloff was overdone as the market appeared to have overlooked an overall drop of 1.7 million barrels in crude inventories. There was also a 2.8 million-barrel draw in distillate stocks, which included heating oil, and a spike in refinery utilization.
"To me, the market's reaction confirms just how bearish sentiment is. Even with decent numbers like these, the market can't rally," said Kyle Cooper, managing director at energy consultancy IAF Advisors in Houston.
OPEC members meet in Vienna on Nov. 27, when they will consider how to respond to the price slump over the past five months. Some have said they want a cut in output.
Qatar expects to lower oil output to about 500,000 bpd by the end of November from 650,000 bpd at the end of October and from 800,000 a month before that, an industry source familiar with the matter said.
But top oil exporter and OPEC's most powerful member, Saudi Arabia, has refrained from backing a cut, prompting speculation that it is more concerned with keeping market share than supporting prices.
"We do not set the oil price. The market sets the prices," Saudi Oil Minister Ali al-Naimi said on Wednesday.