West Texas Intermediate crude fell below $80 a barrel for the first time since June 2012 amid speculation rising U.S. supplies are exacerbating a global glut. Brent fell to its lowest in nearly four years, according to Bloomberg.
Futures slid as much as 2.4 percent in New York, declining for the seventh time in eight days. WTI’s losses have accelerated since it dropped below $100 a barrel in July. The contract plunged about 25 percent in the past three months. Prices have collapsed amid speculation that Saudi Arabia and other members of the Organization of Petroleum Exporting Countries will refrain from cuts needed to drain a surplus, according to Commerzbank AG.
“Eighty is the new $100,” Eugen Weinberg, Commerzbank’s Frankfurt-based head of commodities research, said by phone. “OPEC still seems to be waiting for the market to find a bottom. For the longer-term $80 should be a solid floor.”
WTI for November delivery dropped as much as $2 to $79.78 a barrel in electronic trading on the New York Mercantile Exchange and was at $80.35 at 1:43 p.m. London time. It traded below $80 for the first time since June 29, 2012. Prices have decreased 18 percent this year.
Brent for November settlement, which expires today, declined as much as $1.18, or 1.4 percent, to $82.60 a barrel on the London-based ICE Futures Europe exchange, the lowest since November 2010. The more-active December contract was down 92 cents at $83.20. The European benchmark traded at a premium of $2.74 a barrel to WTI on ICE.
“Production from oil shale continues to grow,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There’s a general lack of confidence. $80 a barrel is a psychological level.”
U.S. crude stockpiles probably increased to 364.1 million barrels in the week ended Oct. 10, according to the median estimate of 10 analysts surveyed by Bloomberg before today’s report from the Energy Information Administration. Production climbed to 8.88 million a day through Oct. 3, the most since March 1986, said the Energy Department’s statistical arm.