In its monthly report, OPEC said its output dropped in October but at current levels it could still produce a daily surplus above 500,000 barrels by 2016.
Brent futures LCOc1 settled down $1.75, or 3.8 percent, at $44.06 a barrel. The tumble of the past week has left Brent less than $2 away from its August lows and a new 6-1/2 year bottom.
U.S. crude futures CLc1 finished down $1.18, or 2.8 percent, at $41.75. Its low in August was $37.75.
“We’re going to have a lot of oil on our hands with the builds we’re seeing, talk of rising tanker storage and the yawning discount between prompt and forward oil,” said Tariq Zahir at New York’s Tyche Capital Advisors.
“If we breach the lower end of the trading range, we could open the trap door to break $40 in the days and weeks to come.”
U.S. gasoline futures RBc1 were also battered, tumbling 4 percent, despite a weekly draw in the motor fuel’s stockpiles. Heating oil futures HOc1 sank 3 percent from an unexpected inventory hike due to unseasonbly warm weather.
The storage spike has sharply widened prompt crude’s discount to oil slated for later delivery as traders hold more in hopes of selling at higher prices later. On Thursday, prompt U.S. crude’s discount to the second-month was at its largest since the end of April. CLc1-CLc2
Oil traders are also watching global tanker traffic carefully this month amid signs that unsold crude may be accumulating on the water.
Reuters shipping data showed tankers with nearly 20 million barrels of Iraqi oil due to sail to the United States in November, potentially the largest import wave in years, while dozens of tankers are already queueing off the Texas coast.