File Photo: Current gas prices are shown at a Shell gas station in Encinitas, California October 10, 2014 (Photo: Reuters)
U.S. crude oil prices on Friday dove below $40 a barrel for the first time since the 2009 financial crisis, notching their longest weekly losing streak in 29 years after a further rise in drilling rigs and a drop in Chinese manufacturing.
Oil prices pushed briefly below the $40-pivot mark following weekly data that showed U.S. energy firms added two more oil drilling rigs last week, the fifth weekly increase in a row. The rise in rigs, which is emerging now after a second quarter lull in prices, is adding to concerns U.S. shale production is proving slow to respond to falling prices.
Energy markets slid early in the day as world stock and currency markets joined an extended rout across raw materials this week, a slump accelerated on Friday by data showing activity in China's factory sector shrank at its fastest pace in almost 6-1/2 years in August.
With deepening gloom over demand growth from the world's second-biggest oil user, and expectations for a significant build-up in surplus oil stocks this autumn, dealers said most oil traders were unwilling to fight the tide.
"The market is stuck in a relentless downtrend," said Robin Bieber, a director at London brokerage PVM Oil Associates. "The trend is down - stick with it."
U.S. October crude fell $1.30, or 3.2 percent, to $40.02 a barrel by 1:09 p.m. EDT (1709 GMT), having touched a new 6-1/2-year low of $39.86 a barrel. Front-month U.S. crude has fallen 33 percent over eight consecutive weeks of losses, the longest such losing streak since 1986.
Brent oil fell $1.44, or over 3 percent, to $45.18 a barrel, threatening to break below $45 a barrel for the first time since March 2009.