Crude Oil Prices Slump 20% From October Highs, Enter Bear Market

Lloyd Doyle
November 10, 2018

On top of the danger of overproduction, there's also the risk to demand from faltering emerging-market economies and a trade war between the US and China. It was down about 3.7 percent for the week and more than 15 percent this quarter. If the contract finishes lower on Friday, it will mark 10 consecutive down sessions, the longest losing streak for the commodity in about 34 years, according to data from Refinitiv.

West Texas Intermediate crude futures for December delivery dropped US$1 to settle at US$60.67 a barrel on the New York Mercantile Exchange, the lowest level since March.

Oil peaked in October on concerns that USA sanctions on Iran that came into force this week would deprive the oil market of substantial volumes of crude, draining inventories and bringing shortages in some regions.

But other big oil producers, such as Saudi Arabia, Russia and shale producers in the United States, have increased output steadily, more than compensating for lost Iranian barrels.

In the USA, crude production increased to a record 11.6 million barrels a day last week, according to Energy Information Administration data. The U.S. crude CLc1 rose 58 cents to $62.79.

The producer group and its allies has been rapidly ramping up output since May, responding to political pressure from U.S. President Donald Trump and offsetting supply losses from Iran and Venezuela. Washington has granted exemptions to Iran's biggest buyers, allowing them to buy limited amounts of oil for at least another six months.

Gas flares burn from pipes aboard an offshore oil platform in the Persian Gulf's Salman Oil Field, operated by the National Iranian Offshore Oil Co, near Lavan island, Iran.

"As OPEC exports continue to rise, inventories continue to build which is putting downward pressure on oil prices", analysts at Bernstein Energy said. "A slowdown in the global economy remains the key downside risk to oil".

A ministerial committee of some OPEC members and allies will on Sunday meet in Abu Dhabi to discuss the market and outlook for 2019. Since then, the USA relented on Iran sanctions with a host of waivers and the bottom has fallen out from crude, including 10 straight days of declines to end the week.

Oil is poised for a fifth weekly loss after slipping into a bear market as record American production, expanding inventories and waivers granted to some countries for Iranian imports stoked concerns of a supply glut.

Other reports by Iphone Fresh

Discuss This Article