Oil is getting smoked

Jeff CurrieBloomberg TVJeff Currie

Crude oil is getting smoked.

Near 8:10 a.m. ET, West Texas Intermediate crude oil was down by more than 2% at around $US46.04 per barrel.

Just a few days after a recovery to over $US50 a barrel, WTI is near its lows for the year.

In a note Friday, Goldman Sachs’ Jeffrey Currie said oil prices have not bottomed yet:

“For oil we believe that fundamental adjustment still has some way to go. In the short-term, we expect US inventories will continue to build at a rapid pace and OECD inventories to also start to build over the coming months. Later in 2015H2 we expect this trend to gradually reverse as the market reaches a new normal.”

Oil is under pressure as US inventories continue to pile up. The oil market is in contango, meaning that futures prices are higher than expected spot prices, and Credit Suisse has said the market could even enter “super contango.”

On Wednesday, the Energy Information Administration reported that US oil inventories increased yet again last week, by 4.5 million to 448.9 million barrels, the highest for this time of the year in at least 80 years.

Later today, we’ll get the latest oil rig counts data from Baker Hughes.

Here’s a chart showing the plunge in oil:

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