Oil drops to one-month low of $76 a barrel
Oil fell on Friday to one-month lows below $76 a barrel after refiners in top consumer the United States processed the least crude in decades, reacting to a fuel demand slump, while talk of bank trading curbs upset speculators.
Proposals by U.S. President Barack Obama to cut proprietary trading at large banks sent Asian stock markets and commodities tumbling, with Japan’s benchmark index losing 2.7 percent, and the dollar slipping to its lowest in a month against the yen.
U.S. refinery utilization, the proportion of total capacity at which refiners operate, fell 2.9 percentage points to 78.4 percent last week, a government report showed on Thursday. That was the lowest since the 1980s, barring occasional periods of hurricane-related disruptions, Department of Energy data showed.
“For the refinery run rates, it’s a bit on the surprise side,” said Serene Lim, a Singapore-based oil analyst at ANZ. “At this time of year they shouldn’t be dropping that much. With low demand, refiners don’t find an incentive to produce more.”
U.S. crude for March settlement touched $75.62 a barrel, the lowest intraday price since December 23, and was trading down 27 cents at $75.82 by 0326 GMT. Prices have dropped more than $8 from a 15-month low of almost $84 on January 11. London Brent crude for March declined 18 cents to $74.40.
U.S. regulator Commodities and Futures Trading Commission (CFTC) on January 14 announced proposals to put a cap on the size of positions dealers can hold, aiming to limit speculation. Most traders considered the proposals to be not as strict as feared.
“With last week’s CFTC proposals, I thought this would be over, but then Obama came out yesterday to increase controls,” Lim said. “Speculators have been very concerned about it.”
Prices were also under pressure from concerns that China would take further measures to temper its booming economy, Lim said. On Thursday, China said growth in the fourth quarter jumped to 10.7 percent, the first double-digit figure since 2008.
“Any efforts by the Chinese government to slow the economy would affect demand for raw materials,” Lim said.
U.S. gasoline inventories rose a larger-than expected 3.9 million barrels the week ended January 15, despite the reduced operating rates at refineries. Total demand for oil products over the past four weeks slid by 1.8 percent from a year earlier.