Oil Close to 11 Year Low as Supply Glut Worsens

Oil prices tumbled 4 percent on Monday, coming close to their 11-year low, on growing fears that the global oil glut would worsen in the months to come in a pricing war between leading OPEC and non-OPEC producers.

Brent crude fell by 4 percent to below $36.40 a barrel for the first time since December 2008 and U.S. West Texas Intermediate (WTI) sank almost 3 percent below $34.60 a barrel.

Brent traded only 14 cents above the lows last seen during the 2008 financial crisis of $36.20 a barrel.

If Brent falls below that level, that will be its lowest since mid-2004 – a year when oil was beginning its surge from the single digits it hit during the 1998 financial crisis and when talk of a commodity super-cycle was only beginning.

WTI’s financial crisis low was $32.40 in December 2008.

“Oil is coming under pressure as the lack of OPEC cuts mean incessant oversupply continues,” said Amrita Sen from Energy Aspects think tank.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza