New York: In the space of about a month, oil has gone from riding a rocket toward $100 to slumping into a bear market. Futures fell 1.6 percent Thursday in New York, extending a decline from its October high to 21 percent. A further drop Friday would make it the longest-ever streak of losses. Oil’s retreat has increased pressure on OPEC and its allies to cut supply just months after adding barrels. U.S. crude production is accelerating, OPEC output is the highest in years and waivers will allow some Iranian crude exports despite U.S. sanctions.
“Sentiment has shifted,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. “OPEC has put on more crude than we thought and second of all, these waivers are becoming an impediment to price support.”
Oil’s slide from a four-year high has been fueled by concerns that faltering emerging market economies and a U.S.-China trade war will dampen fuel demand as supply grows from multiple directions. Over the past few months, OPEC has ratcheted up production amid calls from U.S. President Donald Trump to offset declines in Iranian shipments. In October, OPEC’s crude production hit the highest since 2016 and Russia hiked its output to a record of almost 11.41 million barrels a day.
West Texas Intermediate crude futures for December delivery sank $1 to settle at $60.67 a barrel on the New York Mercantile Exchange, the lowest level since March. Total volume traded was about 37 percent above the 100-day average. It was the ninth straight drop, the longest streak of losses since 2014. WTI is down 21 percent since settling at $76.41 a barrel on Oct. 3, meeting the common definition of a bear market.
Technical indicators signal a rebound may come soon, with the 14-day relative strength index below 30, a level suggesting the market is oversold.
Brent futures for January settlement slid $1.42 to end the session at $70.65 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.79 premium to WTI for the same month.
With oversupply looming, production cuts might be on the horizon once again. Delegates say OPEC ministers and allies will meet Sunday in Abu Dhabi to discuss scenarios including the option to trim production again next year.
Other oil-market news: Gasoline futures fell 0.2 percent to settle at $1.6443 a gallon. Iraq pumped 4.46 million barrels a day of crude in October and exported 3.889 million a day, said a person familiar with the matter. OPEC oil shipments will rise by 670,000 barrels a day to 25.79 million barrels a day in the four weeks to Nov. 24 versus the period to Oct. 27, according to data from tanker tracker Oil Movements.