U.S. oil prices hit a new 13-year low and then rebounded to unchanged in late trading as both oversupply and the threat of coordinated output cuts spooked the market in both directions.
Oil prices sank early in the day as part of a broader market selloff and then sank further after news of growing stockpiles at a key U.S. hub. But that selloff reversed quickly and oil pared losses late Thursday after The Wall Street Journal posted translated comments from the United Arab Emirates' energy minister about whether OPEC members are more open to cutting output.
The minister, Suhail bin Mohammed al-Mazroueifirst, was asked by a Sky News Arabia broadcaster if it is true that the Organization of Petroleum Exporting Countries members are more open to the idea of a production cut and, if so, that there will be a coordinated cut.
"Everyone (in OPEC) is ready to cooperate" on a cut, Mr. al-Mazrouei said. But, he added, OPEC would only cut back if it got "total cooperation from everyone," something that hasn't yet happened despite lobbying from several countries that see production cuts as a way to stop a 20-month swoon in oil prices.
Several brokers and traders called Thursday's rebound unfounded speculation, and accused bullish traders of taking Mr. al-Mazrouei's comments out of context. Additionally, his comments weren't much different from those several OPEC leaders have made in recent months and several rallies based on those past comments have failed quickly after other members of OPEC said they wouldn't participate in any effort to slow production and raise prices.
Several of OPEC's lowest-cost producers, led by Saudi Arabia, have moved to keep production high in order to compete with booming production from elsewhere around the world, especially North America. That has brought prices down more than 70% from the highs of 2014, but Saudi Arabia, Russia, and other leading producers from around the world have not been willing to pull back and have instead pushed to keep outdoing the competition.
"They're still pumping," said Tariq Zahir, who oversees $6 million as managing member of Tyche Capital Advisors LLC. "Until there's actually a meeting and they actually decide to cut output...I would just call this more speculation like we've seen last week and the week before that."
Light, sweet crude for March delivery settled down $1.24, or 4.5%, at $26.21 a barrel on the New York Mercantile Exchange. That is a new low dating back to May 2003 after six-straight losing sessions cut prices by 19%. It is the largest six-day percentage decline since the financial crisis.
Brent, the global benchmark, lost 78 cents, or 2.5%, to $30.06 a barrel on ICE Futures Europe. Brent has since rallied to gains in electronic trading after the settlement, recently trading up 43 cents, or 1.4%, at $31.27 a barrel. U.S. crude is still lower, though it has pared losses to 23 cents, or 0.9%, at $27.21 a barrel.
Brokers and traders said they weren't surprised to see oil's whipsaw action go on much later in the day than usual. Oil has been an especially volatile market in recent weeks and especially so Thursday when it got caught up in a broader selloff predicated on fears of a quaking global economy.
A cautious tone from the Federal Reserve and a resumption of a slide in bank shares fueled big losses in Asian trading to start the day that then spread to other markets across the globe. Investors are seeking safety in U.S. government bonds, the yen and gold, but selling riskier assets, including oil.
Many investors have been lured into oil in an effort to catch the end of its historic collapse. But that has ended badly over several prior rallies, with oil repeatedly plunging lower.
"Fear and loathing" today, said Bart Melek, head of commodity strategy at TD Securities in Toronto. The market could recovery sharply sometime later this year, but "We think it's going to be lousy and nasty for the next three to six months at least."
That was reinforced again late Monday morning by new data on the amount of oil building up at the delivery point for the West Texas Intermediate contract. Data provider Genscape Inc. told clients Thursday that stockpiles in Cushing grew by 550,000 barrels between Friday and Tuesday, according to a person who viewed the data.
Prices retreated to deep losses in response.
Traders have been selling off since Wednesday in part because of filling stockpiles at Cushing, analysts said. Many disputed whether Cushing's increasing stockpiles ultimately should matter for prices, but said the increase highlighted concerns about the glut from growing stockpiles around the world, and the pressure it causes to sell oil at a discount.
"We are in panic mode," said Scott Shelton, broker at ICAP PLC.
Gasoline futures settled down 0.8 cent, or 0.1%, at 94.17 cents a gallon. Diesel futures gained 0.42 cent, or 0.4%, to 97.91 cents a gallon.
Corrections & Amplifications: The words "on a cut" were removed from a quote from Suhail bin Mohammed al-Mazrouei to more accurately reflect the account of his words.
Benoit Faucon contributed to this article.
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