Share

Oil extends losses, nears $33 a barrel

Singapore - Oil prices plunged close to $33 a barrel on Thursday as crude extended losses on rising US energy stockpiles and China's weakening currency.

At 02:30 GMT, US benchmark West Texas Intermediate (WTI) for February delivery was down 60 cents at $33.37.

Its close of $33.97 a barrel on the New York Mercantile Exchange on Wednesday marked the lowest settlement price since December 2008 during the global financial crisis.

In London, Brent crude for February delivery, the European benchmark, was down 62 cents at $33.61.

It had closed below $35 for the first time in more than 11 years at $34.23 a barrel. The last time the price of Brent was so low was in July 2004.

Oil erased earlier gains in Asian hours after the People's Bank of China on Thursday weakened the yuan to the lowest since March 2011, a reminder of the August cut that sparked market turmoil.

"Given that oil moved directly after the fixing, that would indicate Chinese demand is going to be hurt by the weaker currency," Angus Nicholson, a market analyst at IG in Melbourne, told Bloomberg News.

Demand for crude tends to fall when the US dollar is stronger against currencies of purchasing countries. China is the world's biggest energy consumer.

The US Department of Energy's weekly report on Wednesday showed a sharp drop in US commercial crude inventories, by 5.1 million barrels to 482.3 million barrels in the week ending January 1.

"What was unexpected was the overwhelming inventory increase in gasoline and diesel fuel -- the extent of the gasoline inventory build was a very big surprise," said Andy Lipow of Lipow Oil Associates.

"The petroleum product inventory build has led to pressure on crude oil prices because it impacts refining margins and they (refiners) might ultimately cut their demand for crude oil," Lipow said.

The government data also showed a gain in US crude production, by 17 000 barrels a day to 9.22 million barrels a day, the fourth straight week of increases, and a rise in stockpiles at the Cushing oil hub in Oklahoma.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.07
-0.9%
Rand - Pound
24.05
-0.6%
Rand - Euro
20.56
-0.4%
Rand - Aus dollar
12.38
-0.2%
Rand - Yen
0.13
-0.8%
Platinum
894.64
-0.3%
Palladium
992.99
-0.9%
Gold
2,198.42
+0.2%
Silver
24.47
-0.7%
Brent Crude
86.09
-0.2%
Top 40
67,986
+0.5%
All Share
74,202
+0.4%
Resource 10
56,458
+1.4%
Industrial 25
103,645
+0.4%
Financial 15
16,496
-0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders