Oil Dives Below $40 Per Barrel After Rise in US Oil Rigs

Oil Dives Below $40 Per Barrel After Rise in U.S. Oil Rigs
US crude oil prices dive below $40 a barrel for the first time since the 2009 financial crisis, notching their longest weekly losing streak in 29 years after a further rise in US drilling and a drop in Chinese manufacturing.

Reuters

NEW YORK, Aug 21 (Reuters) - U.S. crude oil prices on Friday dove below $40 a barrel for the first time since the 2009 financial crisis, notching their longest weekly losing streak in 29 years after a further rise in U.S. drilling and a drop in Chinese manufacturing.

Oil prices pushed briefly below the $40-pivot mark following weekly data that showed U.S. energy firms added two oil drilling rigs last week, the fifth increase in a row. The rise in rigs, which is emerging now after a second quarter lull in prices, is adding to concerns U.S. shale production is proving slow to respond to falling prices, prolonging a global glut.

"Everyone is still looking at it saying 'Wow, you still don't have production coming down,'" said Tariq Zahir, founder at Tyche Capital in Laurel Hollow, New York.

Energy markets slid early in the day as world stock and currency markets joined an extended rout across raw materials this week, a slump accelerated on Friday by data showing activity in China's factory sector shrank at its fastest pace in almost 6-1/2 years in August.

With deepening gloom over demand growth from the world's second-biggest oil user, and expectations for a significant build-up in surplus oil stocks this autumn, dealers said most oil traders were unwilling to fight the tide.

"The market is stuck in a relentless downtrend," said Robin Bieber, a director at London brokerage PVM Oil Associates. "The trend is down - stick with it."

U.S. October crude fell $1.07, or 2.6 percent, to $40.25 a barrel by 1:41 p.m. EDT (1741 GMT), having touched a new 6-1/2-year low of $39.86 a barrel. Front-month U.S. crude has fallen 33 percent over eight consecutive weeks of losses, the longest such losing streak since 1986.


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