Oil struggles to find footing after 7 per cent slide

SINGAPORE: Oil struggled to find its footing on Wednesday after plunging 7 per cent the previous session, with surging supply and the spectre of faltering demand scaring off investors.

US West Texas Intermediate (WTI) crude oil futures were at $55.52 per barrel at 0732 GMT, down 17 cents, or 0.3 per cent, from their last settlement.

International benchmark Brent crude oil futures were down 9 cents at $65.38 per barrel.

Crude oil has lost over a quarter of its value since early October in what has become one of the biggest declines since a price collapse in 2014.

“Crude oil futures succumbed to overwhelmingly bearish pressure amidst ... weaker market fundamentals,” said Benjamin Lu, analyst at brokerage Phillip Futures in Singapore.

The slump in spot prices has turned the entire forward curve for crude oil upside down.

Spot prices in September were significantly higher than those for later delivery, a structure known as backwardation that implies a tight market as it is unattractive to put oil into storage.

CRUDE OIL HAS LOST OVER A QUARTER OF ITS VALUE IN WHAT HAS BECOME ONE OF THE BIGGEST DECLINES SINCE A PRICE COLLAPSE IN 2014.

By mid-november, the curve had flipped into contango, when crude prices for immediate delivery are cheaper than those for later dispatch. That implies an oversupplied market as it makes it attractive to store oil for later sale.

Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown in Germany and Japan, as well as in China’s falling car sales.