U.S .. Oil prices went for a ninth straight season Thursday, hitting an eight month low and entering a bear market among concerns about increasing global output and signs of worsening demand.
Light, sweet crude for delivery in December ended 1.6% lower at $ 60.67 a barrel on New York's Mercantile Exchange, which sets the contract last month at 21% below the last peak. Brent crude, the global reference level, fell 2% to $ 70.65 per barrel, about 18% below peak. Bear markets are generally defined as a 20% decline from a market downturn.
darley shen / reuters
The US benchmark had risen to almost four years high at $ 76.41 a barrel over a month ago, October 3rd. But since then it has fallen sharply due to increasing production, a softening of US oil efforts against Iran and trade tensions that sparkle concerns for slower global economic growth which could again reduce demand for oil.
Oil sales intensified over the last two days after a report from the Energy Information Administration showed that US oil inventories have risen for seven straight weeks to a four-month high of 432 million barrels. The report also showed that oil production in the US increased to a record of 11.6 million barrels a day, mainly due to production in slate areas such as West Texas and North Dakota.
"The raw buildings certainly did not contribute to prices," said Mark Wagoner. on Excel Futures. "But behind these numbers and what many common people do not know – but oil bearers certainly do – the United States was only the world's largest oil producer a few weeks ago, barely creaking out of Russia. It's huge."
A decision in the Trump Administration in last year to issue dispensations or exemptions from the oil spill against Iran increased pressure on oil prices. The United States allowed eight countries to continue buying Iranian crude oil. In essence, anyone feared a sanctioned supply chain, at least for now.
"Even before a larger number of Iran sanctions were announced on Friday, the market sentiment was soured on raw," analysts on Energy Aspects said in a research paper. "Due to economic uncertainty due to trade tensions in the US and China, longs", or investors who have opted for higher prices, "have given up."
Hedge funds and other speculative investors have pushed stronger oil bills. Bullish games on American commodities represented bearish betting 4-1 as of 30 October, which is much lower than the 26-1 ratio in early July, according to the Commodity Futures Trading Commission data.
The further decline in prices this week increases the importance of a meeting in Abu Dhabi, among members of the organization of petroleum exporting countries, as many expect the group to assess production downturn as a way to increase global oil prices.
"Due to the recent downturn and overuse that seems to materialize next year, OPEC is thinking of reducing oil production,"
analysts said in a note.
Russia, together with the OPEC countries led by Saudi Arabia, has pumped more oil since the summer to compensate for the loss of Iranian barrels, which now appears to be less than expected due to deviations given to some buyers.
Declining raw prices also reflect a weaker demand outlook.
The International Monetary Fund lowered its global economic growth target in 2019, referring to the trade-off between the US and China as a factor in the forecast. About a week later, the International Energy Agency reduced its expectations of growth in oil demand this year and next year. The IEA quoted higher oil prices as a factor in its decision.
Among refined products, petrol futures fell for December delivery 0.2% to $ 1.6443 a gallon. Diesel futures dropped 3.1% to $ 2.1683 a gallon.
Corrections and reinforcements
An earlier version of this story misplaced the name of Excel Futures and the mentioned diesel prices rose. Diesel fell on Thursday. (9 November)
Write to Dan Molinski at Dan.Molinski@wsj.com