Oil still smarting from $6 rout

Battered oil prices stayed weak on Friday after a $6 slump spurred by easing worries about winter supplies. US crude oil futures fell 5 cent...

Battered oil prices stayed weak on Friday after a $6 slump spurred by easing worries about winter supplies.

US crude oil futures fell 5 cents to $43.20 a barrel after the biggest two-day price fall since January 1991, during the first Gulf War. London Brent was 14 cents lower at $40.01 a barrel.

Prices have sunk by more than $12 since October’s record peak of $55.67 and are back to levels last seen in September. The plunge followed an 18-month rally, during which prices doubled in response to the fastest demand growth in a generation that ran down inventories and squeezed spare capacity.

Story continues below this ad

Analysts said the market was struggling to find fresh direction.

“We’re in virgin territory,” said Rick Mueller, market analyst for Boston-based Energy Security Analysis Inc. “People are still trying to figure out this market and there’s no consensus yet on what a fair price is.”

	Easing winter worries

			• Prices have fallen by over $12 since October’s peak of $55.67 and are now back to levels last seen on September • However, analysts said the market was still struggling to find new direction as regards a fair price

This week’s sell-off was triggered by a US government report that showed distillate stocks, including heating oil and diesel, rose by 2.3 million barrels, helping to narrow the supply deficit compared with last year.

While the supply cushion remains relatively low, mild weather in the US Northeast and higher output from refiners coming out of maintenance has soothed worries about supplies of winter fuels. Overall crude stocks are already well above last year’s levels as Opec oil nations produce at the highest rate in 25 years. Opec is to meet in Cairo on Dec. 10 to decide output policy for the first quarter of next year.