Oil prices slumped Friday to lows not seen since last year as concerns over high crude supplies triggered massive selling, dealers said.
The WTI futures contract, the New York commodities markets’ benchmark, and its European counterpart Brent Crude both fell more than six percent on the day.
High global oil production compared to demand was the top reason for Friday’s selling, while the outlook for a weakening world economy led investors to conclude that growth would not be strong enough to soak up the surplus.
“The truth of the matter remains that rising global crude supply coupled with worrying signs of slowing demand have written a recipe for disaster for the oil markets,” said Lukman Otunuga, a research analyst at FXTM.
With a December OPEC meeting not expected to make a major dent in production levels, WTI now had scope to fall to $50 “in the near term”, he said.
In late European trading, WTI held just over USD 51 and Brent around USD 59.
Some analysts said US President Donald Trump had much to do with falling oil prices.
“Although most analysts claim that this has to do with supply overhang and increased production from Russia and Saudi Arabia, the bottom line is that the US President keeps pushing for lower prices,” said Fiona Cincotta, senior market analyst at City Index trading group.
“While this is the case it will be difficult to see a return to oil at a higher level unless oil cartel OPEC decides on a major output cut at its next meeting on December 6.” The pound dropped versus the dollar, a day after spiking on news that Britain and the EU had struck a draft deal over ties post Brexit.
That came ahead of a weekend summit in Brussels to sign off on an overall package on the UK’s exit from the European Union in March.
Elsewhere, the euro dropped as data monitoring company IHS Markit said business growth in the 19-nation eurozone pulled back in November to its slowest rate in nearly four years, as exports weakened.
Eurozone stock markets, meanwhile, recoverd to show mild gains by the close but London ended lower as weak energy prices weighed.
On Wall Street, the Dow index was also under pressure with shares in energy companies feeling the pain from lower oil prices and investors weighing headwinds facing the global economy.
“US stocks are lower in early action following Thanksgiving holiday break, with the energy sector seeing some pressure as crude oil prices are continuing a tumble, while European political uncertainty remains and China/US trade worries are lingering ahead of next week’s G-20 summit,” analysts at Charles Schwab summed up market sentiment. AFP