Oil Continues Tumble As Supply Outpaces Demand

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.

via Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.