Crude oil price smoothed fresh annual falls early Friday, deeper bloodbath in an item that already has futures for the US benchmark portfolio and the international contract on the bearer market.
Global benchmark Brent oil
and WTI are in a bear market, usually defined as a drop of at least 20% from a recent peak.
Here are some reasons why industry experts say contributing to Friday's thumb, which had West Texas Intermediate crude
on the brink of slipping below $ 50 per barrel, by around 7%, approaching the lowest settlement since October 201
- . Trade Volume : Traders say that Friday's decline is at least partly attributable to thinner trading volumes after Thanksgiving, when commodity markets were closed. Lower trading activity can exacerbate movements in an asset, and with a slight fall in a bad decline, the tendency is lower. In addition, the raw market will close an hour earlier at 1:30 Eastern.
- . Profit : US oil production peaked 11 million barrels a day earlier this year, according to Energy Information Administration, sparkling fear that supplies will overwhelm demand.
- . Margin talks: Traders says that Friday's decline has also been intensified with margins from hedge funds and those who wonder the price of oil. A margin call arises when a broker requires a client who has lost money that makes managed bets, pays up extra money to achieve a minimum maintenance margin. Margin calls can lead to forced sales, reinforcing up and down movements.
- . China's demand : China's demand for oil by-product gasoline dropped to its lowest level for 13 months, according to a Reuters report on Friday, giving further evidence that Beijing-Washington trade spit is hurt in the world's second Largest economy and one of the largest importers of energy-related products.
- . Trump : President Donald Trump has consistently been advocating for lower oil prices and on Wednesday released a tweet presser even lower prices and thanking saudies for the last decline.
- . Saudi Arabia in a corner : Market participants have said that Saudi Arabian orchestrated murder by journalist Jamal Khashoggi has complicated policy around oil. Trump is reluctant to punish Riyadh because of a desire to keep fuel prices lower and to maintain the defense sector. The oil-producing nation may feel compelled to comply with the US presidency's desire for lower raw prices.
The oil's congestion is lower, has troubled investors and caused further uncertainty about global economic health. Long-term concern for expansion outside the United States is reflected in the S & P 500 Index
Dow Jones Industrial Average
and the Nasdaq Composite Index
COMP, + 0.19%
Everyone was looking for their worst Thanksgiving week this year.
"Concerns to slow global demand and a possible decline for China," investors have worried that oil is an unfortunate signal for global markets, "said Phil Flynn, senior market analyst at Price Futures Group MarketWatch. "The bottom really falls out of oil," Flynn said.
Tariq Zahir, managing member of investment advisory firm Tyche Capital Advisors, said he believed that margin talks increased to downdraft for oil and speculated that the market could see a settlement under $ 50 per barrel. "I really think that $ 50 will be ruined," he told MarketWatch.
Zahir also said Saudi Arabia, considered the most influential member of the oil company's organization, was unable to drive oil prices higher because of the policy of killing Khashoggi.
"I think Saudi is really painted in a corner," he said. OPEC will convene a key meeting on 6 December that will be monitored for the plan to cope with the dramatic upgrade in prices that have taken hold of.
Market participants believe that the meeting can not arrive soon enough.
See MarketWatch's explanation of how oil swung from a 52-week high to a bear market.
Read: Here are the American dispensations on Iran's oil sanctions that mean the global crude market
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