US Crude Oil Hits Over 6-Year Low on High Stocks

London: US crude oil steadied on Friday after falling to its lowest in almost 6-1/2 years as huge stockpiles and refinery shutdowns heightened concerns about global oversupply.

Oil had already tumbled more than 3 per cent on Thursday, driven by a report that stocks at Cushing, Oklahoma, the delivery point for US crude futures, rose more than 1.3 million barrels in the week to August 11.

US crude hit an intraday low of $41.35 a barrel, its lowest since March 4, 2009, before recovering to $42.28 by 1220 GMT (5:50 p.m. in India), up 5 cents on the day.

Brent crude traded at $49.25, up 3 cents from its previous settlement and some way off its 2015 low of $45.19 reached in January. The front-month September Brent contract expires on Friday.

US crude is much weaker than the North Sea benchmark, partly due to refinery outages sapping US demand. The largest of those refineries - BP's 413,500-barrels-per-day (bpd) facility in Whiting, Indiana, shut two-thirds of its capacity for repairs that could last a month or more.

Robin Bieber, director and technical analyst at London brokerage PVM Oil Associates, said the US crude oil contract, also known as West Texas Intermediate or WTI, had become somewhat dislocated from Brent.

"The contracts are not all on the same technical page and this causes a lack of clarity," Mr Bieber said. "WTI could plunge but the rest hold steady."

Commerzbank analyst Carsten Fritsch said he didn't expect an accelerated drop in prices, but rather "a slow grind lower" as long as the Whiting refinery was out of service.

Petromatrix oil analyst Olivier Jakob said WTI could fall further, but Brent was in a consolidation phase: "WTI is still facing some local issues and it could weaken more. Otherwise Brent will start to stabilise."

Goldman Sachs said a weaker Chinese yuan was putting downward pressure on all commodity markets, signalling a change in global macroeconomic conditions.

"We believe the net commodity market effects are bearish," it said in a note to clients.

Analysts said prices could drop further still unless oil production started to fall, particularly in North America.

"The lowest crude prices in six years might not be enough to put the brakes on the US supply growth. US shale players are actively cutting costs and some players are profitable at less than $30 per barrel," ANZ Bank said.