Crude oil tumbles under $40 per barrel

New York: Oil dropped below $40 (Dh146.80) a barrel in New York for the first time since August as producers’ output swelled global inventories to a record.

Oil inventories have expanded to almost 3 billion barrels because of growing output in Opec and elsewhere, the International Energy Agency said in a report on Friday. US supplies climbed to the highest for the season in more than 80 years, according to US government data.

“The market is being overwhelmed by rising supply,” said Michael Corcelli, chief investment officer of hedge fund Alexander Alternative Capital LLC in Miami. “We could test the six-year lows reached in August at any moment. We will either break through or put in a bottom.” Oil dropped to an intraday low for the year of $37.75 on August 24.

Crude has dropped by almost half in the past year as the Organisation of Petroleum Exporting Countries pumped above its collective quota and Russian output rose to a post-Soviet high, outpacing demand growth. Iran is pushing to regain oil sales lost to sanctions after agreeing in July to accept limits on its nuclear work return for market access. Oil price competition in Europe is set to intensify when Iranian crude returns, the IEA said.

WTI, Brent

WTI for December delivery dropped 71 cents, or 1.8 per cent, to $39.96 a barrel at 11.59am on the New York Mercantile Exchange, the lowest since August 27.

Brent for January settlement slipped 14 cents to $43.43 a barrel on the London-based ICE Futures Europe exchange.

Total oil inventories in developed nations increased by 13.8 million barrels in September, a month when they typically decline, according to the IEA. The pace of gains slowed in the third quarter, although growth remained “significantly above the historical average”. There are signs some fuel-storage depots in the Eastern Hemisphere have been filled to capacity, it said.