Oil prices have now broken below many Wall Street targets and look set to test the year’s lows and beyond, before finding a bottom. Led by international bench mark Brent crude, futures were slammed Monday on concerns about new supply coming on the market and worries about contracting demand from China.
“The sentiment is bearish. Technicals are bearish. There’s a lot of downward momentum,” said Michael Wittner, head of commodities research Americas at Societe Generale. “There are a lot of bearish nonfundamentals and fundamentals out there. I’ve got to think these things are close to being priced in. I know it’s ugly out there right now, but I’m not buying that this is a full collapse. … It looks like the market wants to retest the lows from the first quarter. It could happen. Obviously, we’re not that far away from that.”
Brent slipped below the psychologically key $50 per barrel level, opening the door for a retest of its 2015 low of $45.19 from January. Brent finished the day at $49.83 per barrel, and is now down 13 percent for the year. Its more than 4.5 percent drop Monday outpaced the 3.6 percent decline in West Texas Intermediate oil futures. WTI fell to $45.17 per barrel, just several dollars above its year low near $42.