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US oil futures slipped to their lowest price since the financial crisis as a refinery glitch threatened to add to a persistent glut of crude.
Nymex September West Texas Intermediate crude dropped below $42 a barrel late on Thursday — a price last seen in 2009 — before settling down 2.5 per cent at $42.23.
As many analysts had predicted, the oil market has resumed a lower path as the end of an active US summer “driving season” nears and producers from North America to member countries in the Opec cartel keep pumping.
But the market in the US — the world’s biggest oil consumer — faced extra pressure after a BP-owned refinery suffered problems that will diminish its thirst for crude.
On Wednesday, BP acknowledged that the largest of Whiting’s three crude units, which processes about 240,000 barrels a day, had been down since Saturday for unscheduled repair work. The refinery draws heavy crude from Canada as well as Cushing, Oklahoma, the tank hub that is also the delivery point for the WTI futures contract.
Market speculation suggests it could be out for more than a month, possibly more than two.
Reuters reported on Thursday afternoon that leaks had been found in piping at the plant, citing people familiar with the refinery’s operations. Traders said that could be a complex fix for the company.
Andy Lipow, president of Lipow Oil Associates consultancy, said: “The bottom line is that every day the Whiting crude unit is down adds 240,000 b/d of supply into the midcontinent market . . . That unwanted crude is going to build inventories in Canada as well as the midcontinent. Some of it is going to be placed in storage in Cushing.”
Genscape, the Data company, reported that Cushing stockpiles increased more than 1.3m barrels in the week to August 11, including a jump of 889,455 barrels between August 7 and 11 alone.
The price of Canadian heavy crude fell below $23 a barrel as traders scrambled to place barrels. ICE September Brent crude, the global benchmark, fell 0.9 per cent to $49.22 a barrel.
The Whiting outage threatened to leave petrol forecourts in short supply. Wholesale Chicago gasoline prices have surged 50 per cent since last week to more than $2.50 a gallon.
US drivers have taken advantage of cheaper fuel this summer, with petrol consumption approaching the robust levels of a decade ago. However, world oil supplies that are growing at what the International Energy Agency called “breakneck speed” continue to outpace consumption.