U.S. oil futures sank below the key $40-per-barrel level, and now crude could test August lows and possibly fall into the low $30s per barrel.
The latest U.S. government data show that oil supplies continue to build, though at a slower pace in the past week than in the prior week. But the figures reinforced that the global oil supply glut — with some 3 billion barrels stockpiled worldwide — is showing no signs of abating.
West Texas Intermediate futures for December briefly slipped to $39.91 in Wednesday afternoon trading, the first time below $40 since oil touched $37.75 per barrel in August. WTI futures closed at $40.75.
"I think the report just continues to underscore that we're awash in oil, and there's nothing seemingly changing. Production is still above 9.1 million. We're 120 million barrels above the five-year average in U.S. crude stocks," said Gene McGillian, analyst with Tradition Energy. "I really thought when the market broke below the $43 level, that really opened the window to the six-year lows."