Arthur J. Villasanta – Fourth Estate Contributor
New York, NY, United States (4E) – Just five weeks after hitting a four-year high, U.S. oil prices plummeted into bear market territory on Nov. 9 in a dizzying display of unnerving market volatility.
That plunge on Friday saw prices tumble to an eight month low, pulling both Brent crude, the global benchmark, and West Texas Crude futures into bear market territory amid a production boom.
West Texas Intermediate (WTI) crude for December delivery on the New York Mercantile Exchange fell $1, or 1.7%, to settle at $60.67 a barrel. This is its ninth straight losing session and the lowest close since March.
The closing left U.S. oil down 20.6% from its Oct. 3 peak, meeting a widely applied definition of a bear market as a drop of 20% from a recent high.
October saw fear-inducing volatility quickly reversing huge gains in the crude-oil market, which had rallied sharply thus far this year. Gains were driven in part by fears the Trump administration’s renewal of sanctions against Iran; bottlenecks in U.S. shale-oil producing regions and strong domestic economic growth would tighten the oil market.
WTI hit a nearly four-year high above $76 a barrel on Oct. 3, while Brent topped $86 a barrel. Brent is off more than 18% from its recent high
Analysts said investors are reassessing their assumptions for worldwide demand amid a surge in U.S. production and waivers granted by Washington to eight countries that will allow these countries to temporarily continue buying Iranian oil for six months. Among these countries are India, Japan, Italy, South Korea, China and Turkey.
American producers are now pumping a record 11.6 million barrels per day, said the Energy Information Administration. Crude stockpiles have risen to the highest levels in seven months ahead of a weekend meeting of junior ministers of the OPEC cartel in Abu Dhabi.
Last month, the International Energy Agency reduced its forecast for 2019 demand growth to 1.36 million barrels per day, citing a “weaker economic outlook, trade concerns, higher oil prices.” It said big production boosts from OPEC lead Saudi Arabia meant that the global market is “adequately supplied for now.”
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