West Texas Intermediate crude tumbled further into a bear market amid signs of a global glut. Brent, the benchmark grade for more than half the world’s oil, traded near a four-year low.
The U.S. benchmark slumped as much as 2.5 percent today while Brent slipped 2.2 percent. WTI closed yesterday more than 20 percent below its June peak, a common definition of a bear market. Brent is down 22 percent over a similar period.
The world’s two most-traded crude futures are collapsing because demand growth is slowing at a time when output is expanding from countries including the U.S. and Russia, the largest suppliers outside OPEC. The Organization of Petroleum Exporting Countries increased oil production by the most in almost three years last month as Libyan output surged.
“WTI is on track to at least touch $80,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion, said by phone. “The global economy is slowing and that’s going to impact demand. OPEC’s gotten a free ride the last few years because of the low level of Libyan production, but they’re back now.”
WTI for November delivery dropped 61 cents, or 0.7 percent, to $85.16 a barrel at 9:21 a.m. on the New York Mercantile Exchange. The contract touched $83.59, the lowest level since July 3, 2012. The volume of all futures traded was more than double the 100-day average for this time of day.
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