Oil prices crash below $27 a barrel

The disappointed part of the data is USA crude production only fell 28,000 barrels to 9.186 million barrels a day last week, according to the EIA report.

On Wednesday morning, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that U.S. commercial crude oil inventories for the week ending on February 5, decreased by 754,000 barrels from the previous week.

Oil is down 27 per cent this year on speculation a global glut will persist amid the outlook for increased exports from Iran after the removal of sanctions and brimming United States crude supplies.

On the Intercontinental Exchange (ICE), Brent crude for April delivery wavered between $30.35 and $31.88 a barrel, before closing at $30.91, up 0.62 or 2.06% on the session.

Some market analysts said the support for oil prices mirrored a recovery across European stock markets rather than the Wall Street Journal report.

Friday’s jump came after a Middle East energy minister of an OPEC country said the producer club was willing to talk with other exporters about cutting output.

US West Texas Intermediate (WTI) crude futures were at $26.96 a barrel, down 49c and within a dollar of the $26.19 a barrel 2003 low from January. Prices, however, soon lost strength after traders read through the headline numbers, which showed a build of crude inventories at Cushing, OK (the delivery point for the WTI contract) of 500,000 barrels, and increases to both gasoline and distillate stocks (which includes diesel and heating oil).

While countries like Saudi Arabia, Iraq and Iran can cope with global price of oil around $30-$50 per barrel, the same cannot be said for countries whose economies largely depend on oil.

Cuts by OPEC would mark a reversal. Saudi Arabia, the world’s top exporter, rose output by 44,000 bpd in January to 10.091 bpd, near all-time record highs. The retreat in non-Opec supply indicates that the organisation’s Saudi-led strategy to defend market share is having some success.

Light synthetic crude from the oil sands held on to its premium versus WTI, boosted by upcoming maintenance in the oil sands that are set to curb supply.