Glut in crude oil sees 12-year low of $32

Oil lurched to new 12-year lows before paring some losses yesterday, with some traders betting a rout triggered by fears over China demand and swelling US stockpiles had run its course, for now.

Global benchmark Brent crude fell as much as 6% to nearly $32 (€29) a barrel, its lowest level since at least April 2004, as another free-fall in the Chinese stock market rattled investors already concerned by the world glut in crude.

But in New York trade, Brent pared those losses as some traders took profits after prices slid nearly 14% in four days.

“I’ll say it’s oversold on a short-term basis, though I am an oil bear,” said Tariq Zahir, who trades mostly longer-dated spreads in US West Texas Intermediate crude futures (WTI) for the Long Island, New York-based Tyche Capital Advisors fund.

“There’s covering and also some panic buying in an attempt to support WTI at above $32.”

Brent was 25 cents lower at $33.98 a barrel after sliding during European trading to a low of $32.16, a level last seen in April 2004.

WTI was down 50 cents at $33.47, after hitting a low of $32.10, their lowest since late 2003.

China allowed its yuan currency to slip yesterday, sending regional currencies and stock markets tumbling globally.

Stock market trading was suspended less than half an hour after opening after sharp falls triggered a new circuit-breaking mechanism for a second time since its introduction this week.