According to the news report by Reuters, the price of oil fell by almost 1% on Friday. Global oil supplies have started to rise and investors’ concerns about a slowing down in demand has combined to push down the price of crude oil in the US. This is longest stretch of declines witnessed in oil since 1984.
Since their peak in early October, the oil futures benchmarks have fallen more than 20%. RBC Capital Markets commodities strategist Michael Tran stated that it was amazing how much of a difference just a month could make.
The market’s sentiment dramatically shifted in that short time frame. Just a month ago, the bulls were calling out a $100 price for oil. In fact, bullish sentiment had been the highest in many years.
However, now, just a month later, sentiment has turned on its head and now people are saying investor sentiment is the weakest it has been since 2016.
The international crude oil benchmark, Brent crude LCOc1 futures, dropped by 47 cents to close the trading day at $70.18 per barrel. That is a 0.7% drop in the price of crude.
In fact, during the day’s trading, the benchmark fell below $70 for a brief period. This is the first time that the Brent crude benchmark has fallen below – even for a short time – below the $70 mark since April this year. The price of oil dropped as much as 20% lower than its 4-year highs that were touched in October.
The Brent crude international was down 3.6% for the week, and over 15% for the quarter.
The American crude oil benchmark, the West Texas Intermediate dropped its prices for the 10th day in a row. This is the longest losing streak the benchmark has seen since 1984.
The US West Texas Intermediate futures CLc1 fell by 48 cents to close the trading day at $60.19 per barrel. That is a 0.8% drop. The lowest that the price of crude dropped in trading on Friday was to $59.26 per barrel, which is also the lowest the price of oil in the US has been in the last 8 months. Since its October peak, the price of crude oil in the US has fallen by more than 22%. Now, the US crude oil market is official in a “bear market” situation.
Hedge funds also cut their bullish bets on American crude oil this week. This is also the lowest that they have gone in the last one year. It didn’t help that there have been forecasts of slowing economic growth in 2019 thanks to the ongoing and ever escalating trade war between the United States and China.
On Friday, China released data that showed that producer inflation had fallen once more in October, making it the fourth straight month of declines thanks to lowered domestic demand and slowing manufacturing activity. This report ensured that pretty much all global markets declined.
The price of oil shot up in October on the back of fears that the sanctions imposed by the US on Iran would impact global oil supplies. However, that is no longer the case. Other oil producers have stepped in compensated for the loss.
Additionally, the sanctions do not seem to be as complete as earlier believed. The US has granted certain exemptions to the oil producer’s biggest buyers. In fact, a South Korean delegation is scheduled to visit Iran next week to negotiate the resumption of oil imports after a three-month gap.
China’s National Petroleum Corp. also stated that it would continue to import oil from Iran.