U.S. oil prices crashed below $27 dollars a barrel on Wednesday for the first time since 2003, caught in a broad slump across world financial markets with traders also worried that the crude supply glut could last longer.
Oil has fallen more than 25 percent so far this year, the steepest such slide since the financial crisis, piling more pain on oil drillers and producing nations alike. Yet they keep pumping more oil into an oversupplied market.
Sure enough, fresh data from the American Petroleum Institute on Wednesday showed U.S. crude stocks rose more than expected last week. Crude inventories rose by 4.6 million barrels in the week to Jan. 15 to 485.2 million, well above analysts' expectations for an increase of 2.8 million barrels, the industry group said.
Venezuela requested an emergency OPEC meeting to discuss steps to prop up prices, but other delegates dismissed the idea.
A Middle Eastern shipping firm became one of the first to resume direct business with Iran after international sanctions on Tehran were lifted at the weekend, a reminder of how quickly more oil may flow.
"The Iranians are clearly stepping it up to battle for market share in Europe," said John Kilduff, partner at Again Capital LLC in New York. Not only is that a major market for Saudi Arabia and Russia, but U.S. oil is now flowing unfettered to Europe for the first time, "so it's a battle royale."
U.S. oil recorded its worst settlement since May 2003 on Wednesday, caught in a broad slump across world financial markets with traders also fearful that the crude supply glut could last longer.
U.S. benchmark West Texas Intermediate (WTI) prices for February delivery settled at $26.55 a barrel, down $1.91, or 6.71 percent, up slightly from an intraday low of $26.19, its weakest price since May 2003. The February contract expired Wednesday.