There goes crude oil again.
On Tuesday, West Texas Intermediate crude futures in New York fell 4% to as low as $US42.92 per barrel. Brent crude, the international benchmark, was also lower, below $US50 per barrel, after on Monday having its biggest one-day jump in a month.
We got OPEC’s latest monthly production numbers Tuesday morning, and they showed that production surged to a three-year high in July. The 12-member oil cartel has overshot its production target for at least a year in a bid to maintain its market share.
After what seemed like a recovery in prices around May, crude continued its plunge late in June and collapsed 20% from recent highs into a bear market last month.
Analysts do not see the slide in commodity prices slowing down soon. As Business Insider’s Myles Udland highlighted over the weekend, Goldman Sachs’ commodities experts think we have entered a New Oil Order, where the barriers to entry are much lower and small shale producers can produce plenty of oil cheaply and quickly.
On Monday, Macquarie analysts said commodities were reentering a “deflationary vortex.” The undersupply of the dollar is making it more expensive, and fewer dollars are buying commodities, creating an excess.
And Tuesday, WTI fell to a fresh six-year low.
Here’s a chart showing the slump in WTI on Tuesday morning.