Oil could continue its deep slide, possibly dipping into bear market territory, under new pressure from Saudi Arabia’s decision to defend market share, as opposed to cutting production to battle falling prices.
A well-supplied oil market, helped by increased North American production and softer global demand as Europe’s economy falters and Chinese demand growth slows, has created a supply imbalance that has driven prices sharply lower. The Saudi move is counter to expectations that it would further cut its 9.6 million barrel-a-day production to bring back oil prices.
West Texas Intermediate oil futures for November hit a 17-month low early Thursday, falling below the $90 mark for the first time since April 2013. That was a 16 percent decline from its June high. Brent, the international benchmark, fell to a 27-month low of $91.55 per barrel, before recovering at about $93 per barrel for November futures. Brent, at the low, was about 19 percent off its high. A weaker dollar helped lift oil off its lows.
Oil analysts expect oil to fall another couple percent, which could take both WTI and Brent into bear market territory—a 20 percent decline from recent highs.