Oil excess hits record high of 3bn barrels

Light, sweet crude for December delivery fell as low as $39.91 a barrel on the NY Mercantile Exchange, the lowest intraday level since August, then settled up 8 cents, or 0.2%, at $40.75 a barrel.

SINGAPORE- Crude oil prices edged up in Asia on Thursday but still struggled to break away from the $40 a barrel mark as oversupply and high inventories ensured an ongoing glut.

“Unless the geopolitical tensions, which have obviously risen since Friday, are going to be manifested in physical supply destruction in the Middle East, I think sentiment should remain more bearish than bullish”.

Crude futures tumbled earlier after the EIA data showed the eighth straight week in builds leaving inventories at 487.3 million barrels, within a hair of the April record of 490.9 million.

NEW YORK-Oil prices briefly dropped below $40 a barrel Wednesday before settling higher as the dollar pared gains.

“Yesterday’s rally was a reaction to the likely increase in geopolitical risk despite the fact Syria itself is not a big oil producer”, said Pete Donovan, broker at New York’s Liquidity Energy. In the commodities market – though the players are individually seeking out the greatest degree of economic return for their efforts – the overall usefulness of the group is in the ability to absorb the shocks in supply or demand, until those shocks can be responded to by long horizon investment projects by the oil production community.

On Monday, crude prices had gained more than 2 percent on security fears related to Friday’s attacks in Paris, and France’s heavy bombing of Islamic State targets in Syria in the aftermath.

In London trade, Brent North Sea crude for January delivery slid 99 cents to $43.57 a barrel. Crude inventories in the US are nearing 80-year record highs, and around the world storage is also filling up. The data was expected to show that crude inventories rose by 1.9 million barrels last week. The 140 plus USA refineries, which are critical to America’s oil energy supply system, and even the export of its refined derivatives, hold the key to the huge US energy system’s channel of distribution.

The current monthly imports are 0.1% more than last year’s imports. That’s part of a deliberate strategy by the main exporters, which are aiming to protect their market share and damage the previously booming United States oil industry.

Analysts lowered their end-2015 forecasts for Brent to $50 per barrel (from $55) and for WTI to $45 per barrel (from $50), but they left their end-2016 forecasts at $60 and $55 per barrel respectively.