(Bloomberg) — Brent futures dropped below $70 a barrel for the first time since December 2021, a fresh leg lower in a price slump spurred by robust supplies, demand concerns and rampant speculative selling.
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The global benchmark fell as much as 3.8%, while West Texas Intermediate crude slid as much as 4.2%, also hitting the lowest intraday price since December 2021.
Downbeat economic data from the US and China — including weak import figures released Tuesday — have stirred fears about oil demand in the top two consumers, adding to concerns that a surplus will emerge next year. That’s being compounded by surging output in producing nations outside the Organization of Petroleum Exporting Countries.
“China import-export numbers implied demand destruction in the number one importing country in the world,” said Robert Yawger, director of the energy futures division at Mizuho Securities USA.
The bearish rut comes despite the OPEC+ alliance postponing its original plan to add 180,000 barrels a day next month as it gradually restarts output that was halted since 2022 in a bid to shore up prices.
Even after changing the output plan, OPEC kept its demand forecast steady in a market outlook released this week. The International Energy Agency — which previously forecast a surplus next year — is due to publish its own monthly report this week.
The market’s increasingly bearish tone spurred Wall Street banks to pare price forecasts for the coming quarters.
“The tone of the oil market remains downbeat,” said Norbert Ruecker, an analyst at Julius Baer. “The fundamental headwinds should persist. Demand is partially stagnant, production grows in the Americas, and the oil market likely heads into surplus supplies next year.”
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