- Front-month WTI crude oil futures plunged more than 7% on Tuesday to the lowest level since August 2017.
- From early October, prices have tumbled 40%.
- Technical selling and reports of record production in the United States and Russia have been cited as catalysts behind the recent price plunge.
There’s plenty of ugly charts out there right now, but few are as ugly as WTI crude oil.
Prices are getting crushed, sliding a mammoth 7.5% on Tuesday to the lowest level since late August 2017. The front-month contract has now shed 40% since early October.
Remember the chatter about $100 per barrel being breached just a few months ago? Yeah, nah.
Along with technical selling following a break below the November low, the latest plunge seems to have been sparked by reports of record output in the United States and Russia, the world’s largest crude producers.
“The market wants to take oil lower and news of recent days seems to have given traders the ammunition to sell it lower,” said David de Garis, Economist at the National Australia Bank.
“The US EIA reported earlier this week that it expected US shale production to rise in January while there are reports that Russian production reached a record in December.
“We also note that US oil production has risen more than 15% this year and that rig count numbers have, so far, been relatively resilient.”
At a time when concerns about the global economy are elevated, potentially sapping demand, the price movements over the past couple of months are not all that surprising.
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