Oil heads for eighth straight week of falls

WTI crude has plummeted more than 31 per cent over the past eight weeks, second only to a 10-week losing streak between December 1985 and March 1986, which resulted in the US benchmark dropping 54.33 per cent to $12.28 a barrel.

Friday’s fall, to $39.86, was just the latest indicator of a vast shift in the energy landscape over the past year.

The number of active US oil rigs rose by two to 674 Friday.

Low oil prices will have to force an adjustment in production, as high-cost producers put off projects.

U.S. crude inventory climbed to 456.2 million barrels last week, up 2.6 million barrels over the week before, according to the EIA.

A July report from Wood Mackenzie estimated that 46 large oil and gas projects, that would require around $200 billion in spending to develop, have been indefinitely postponed.

Brent for October settlement fell 3 percent to $45.21 a barrel on the London-based ICE Futures Europe exchange.

Nymex reformulated gasoline blendstock-the benchmark gasoline contract-fell 1.8% to $1.51 a gallon.

I think it is entirely possible we will see that price. Abu Dhabi is raising crude production capacity and making more oil products available for export after expanding a refinery. Analysts had previously been expecting stocks to decline.

George Zivic, portfolio manager for the Oppenheimer Commodity Strategy Total Return Fund, who oversees $350 million in assets, said he largely closed out his bearish oil bets after prices fell below $44 a barrel.

“To boil it all down, one can buy completely derisked production (plus growth) for the same price or less than developing a new project with all of the execution risk”, such as timing, the availability of cash and the quality of the reservoir, Mr. Hulshof said in a note.

“The Chinese slowdown continues to dominate the oil market, causing persistent concerns over a serious decline of Chinese oil demand in the second half of the year”, said Myrto Sokou, senior analyst at Sucden Financial.

The United States and producers from the Organization of the Petroleum Exporting Countries have decided against cutting high production levels despite falling prices as they fight over market share.

The surprise jump in inventories at a time when they normally fall added to concerns of a global surplus, particularly as signs emerge that demand is faltering in top energy importer China. It may even move lower, but at some point it is going to go back to at least $60.

According to RBC Capital markets, the “Fragile Five” are facing a tough time. A day earlier, New York-traded oil futures plunged 1.85, or 4.29%, to end at 41.27 after data showed that oil supplies in the U.S. rose unexpectedly last week.

Eric Yep in Singapore contributed to this article.