West Texas Intermediate crude traded near the lowest level in more than two years as rising U.S. production increased supplies. Brent was little changed.
Both grades have collapsed into a bear market as shale supplies boost U.S. output to the most in almost 30 years and global demand growth weakens. The largest OPEC producers are responding by cutting prices, sparking speculation that they will compete for market share rather than reduce supply.
“The supply boom is ongoing,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Nobody sees any reason to buy so people just keep selling off. The Saudis will have to cut production to stabilize the price.”
WTI for November delivery fell 4 cents to $81.80 a barrel at 11:55 a.m. on the New York Mercantile Exchange after touching $80.01, the lowest level since June 29, 2012. Prices are down 24 percent from June’s high of $107.26. The volume of all futures traded was more than double the 100-day average.
Brent for November settlement declined 19 cents to $84.85 a barrel on the London-based ICE Futures Europe exchange after reaching $83.37, the lowest intraday price since November 2010. Volume was 56 percent above the 100-day average for the time of day. Prices have decreased 27 percent from the June high. WTI traded at a $3.05 discount to Brent on the ICE.