Another day, another oil price crash, and OPEC can do nothing to stop it:
Oil prices plunged to their lowest levels in over a year on Thursday, deepening a sell-off fueled by concerns about oversupply as stock markets slumped on rising U.S. interest rates.
U.S. West Texas Intermediate crude ended Thursday’s session down $2.29, or 4.8 percent, at $45.88, the lowest closing price since July 2017. WTI is now down about 24 percent this year.
Brent crude, the international benchmark for oil prices, fell $2.89, or about 5 percent, to $54.35, its weakest settle since mid-September 2017. Brent has shed nearly 19 percent in 2019.
Crude futures staged a rally in the previous session on signs of strong fuel demand in the United States. However, bearish reports out of Asia overnight added to worries on both the supply and demand sides of the oil market ledger.
“There’s just a really negative narrative out there,” said John Kilduff, founding partner at energy hedge fund Again Capital. “The stars are just aligned right now in a bearish way.”
Crude futures have now fallen more than 35 percent from their 52-week highs in early October. The market is grappling with surging supply from the world’s top three producers — the United States, Russia and Saudi Arabia — at a time when demand for oil is expected to grow less than previously expected.
The truth is that the oil price increase was always speculation driven, and didn’t make much sense. The long term trend has been for the US to eclipse Saudi Arabia as a producer of oil, and US production is just going to keep increasing. With those core facts on the ground, high oil prices are never going to be sustainable.