Oil prices continued to fell deeper into its latest bear market overnight Wednesday with prices in the US and Europe hitting new multi-month lows.
Brent crude futures, the key global marker fell under $US45 a barrel in London to settle at $US44.67 – down 29% on the day. In New York West Texas crude futures dropped to their lowest since last August, losing 2.3% or nearly a dollar a barrel to hit $US42.53.
Helping drive prices lower was yet another rise in US output last week.
In fact despite a fall in US oil stocks last week of 2.5 million barrels, American production rose 20,000 barrels a day to 9.35 million barrels a day, according to figures from the US Energy Information Administration showed.
That’s up 673,000 barrels on the same week in 2016, or a third of the 1.8 million barrels a day production cap agreed to by OPEC and extended in May to next March.
The broader trend for oil is its “steady slide” in prices, since the Organization of the Petroleum Exporting Countries in late May extended its output-cut agreement through March of next year, said Robbie Fraser, commodity analyst at Schneider Electric, told Marketwatch.com.
“The primary factor behind that drop continues to be upward revisions to U.S. production expectations, which was once again highlighted” by a 20,000 barrel-per-day increase in the Energy Information Administration’s weekly production estimate, he added.
Oil prices are down 20% from their last high point in February, with cuts by the Organization of the Petroleum Exporting Countries offset by increasing production elsewhere.
The sell off has spilled over into stockmarkets, with the big fall on Tuesday making a mess of the Aussie market o Wednesday.
Australia’s S&P/ASX 200 slid 1.6% or 92 points as oil stocks fell across the board. Other markets fell, though Wall Street did a bit better overnight and the ASX futures trading was pointing to a small gain this morning when trading starts of around 12 points.
The last time crude oil fell into a bear market was in August last year. It rebounded strongly, entering a bull market late last year, after OPEC started its production cap, including Russia in the deal.
But since hitting its most recent high in February, crude prices have fallen (and despite a long fall in US oil stocks) as US shale oil production has risen week after week (and the number of rigs in use has risen alongside) and the market oversupply has continued and looks like doing so into 2018.
