U.S. oil futures in New York slid to the lowest in 12 years as turmoil in China’s markets pushes crude closer to $30 a barrel.
West Texas Intermediate fell as much as 5.5 percent on concern that the economic slowdown in the world’s biggest commodity consumer is worsening. China’s central bank cut the yuan’s reference rate by the most since August, triggering a selloff that led to the closure of Chinese stock exchanges. Brent oil will slump to $30 in the next 10 days, Nomura Holdings Inc. said, while UBS Group AG sees oversupply pushing prices even lower.
“It’s hard to see what will turn this market around,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. “This is starting to look like the dark days of 1998 when economic troubles in Asia sent prices down to the $10 area.”
Oil capped the biggest two-year loss on record in 2015, exceeding the slump driven by the Asian economic crisis from 1997 to 1998 that sent Brent to $9.55 and WTI to $10.35. The Organization of Petroleum Exporting Countries effectively abandoned output limits last year adding to the global glut.
Crude stockpiles at Cushing, Oklahoma, the delivery point for the U.S. benchmark oil, rose to a record while nationwide supplies are more than 120 million barrels above the five-year average, according to Energy Information Administration data.
WTI for February delivery fell 83 cents, or 2.4 percent, to $33.14 a barrel at 9:12 a.m. on the New York Mercantile Exchange. Prices touched $32.10, the lowest since Dec. 29, 2004. The contract lost 8.3 percent over the previous three days.
The most-traded option on Nymex gave holders the right to buy February futures at $36, ahead of contracts to sell WTI for that month at $32 and $30.
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