NEW YORK (Reuters) — U.S. oil prices traded below $40 a barrel for the first time since the 2009 financial crisis on Friday, ending 2 percent lower on signs of U.S. oversupply and weak Chinese manufacturing and notching the longest weekly losing streak in almost three decades.
U.S. crude dipped below the $40 threshold 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 the number of rigs emerging 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, a huge user of many commodities, 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
It pared some losses late in the trading session, as U.S. RBOB gasoline futures
The current collapse in oil prices, the second this year, has raised alarm within the Organization of the Petroleum Exporting Countries (OPEC), including some of its core Gulf members. However, there is no indication they will reverse their policy of keeping production wide open to defend market share, delegates told Reuters this week.
(Additional reporting by Christopher Johnson in London and Jacob Gronholt-Pedersen in Singapore; Editing by Marguerita Choy and Alden Bentley)
A customer holds a nozzle to fill up his tank in a gasoline station in Nice December 5, 2014. REUTERS/Eric Gaillard