Investing.com – It’s beginning to look a lot like the Christmas that will set up $40 oil.
The selloff in crude showed no signs of slowing on Monday, with U.S. West Texas Intermediate and U.K. Brent losing another 3% each, bringing the 10-week rout in oil now to well over 40%.
“For oil, it is all about economic turmoil,” Phil Flynn, analyst at Chicago’s Price Futures Group, said, citing the partial U.S. government shutdown and global recession fears that have seized the market since the pledge by OPEC to cut as many barrels as needed to restore prices which have lost more than $30 a barrel from early October highs.
On Wall Street, the edged closer to bear territory on Christmas Eve in a shortened session as the political impasse over the federal budget continued and Treasury Secretary Steven Mnuchin’s move to convene a crisis group added to nerves.
was down $1.33, or 2.9%, at $44.26 per barrel by 12:43 PM ET (17:43 ET), after plumbing a July 2017 low of $44.11 earlier. With just a week to the end of 2018, WTI is down 27% on the year and is off 43% from four-year highs of nearly $77 a barrel hit in early October.
was down $1.59, or also 2.9%, at $52.51, after making a July 2017 low of $51.50 earlier. WTI is down 22% on the year and is off 40% from four-year highs of nearly $87 a barrel hit in early October.
Traders have increasingly braced themselves for the possibility of WTI hitting below $40 a barrel before the year is out.
“The first big support to take out will be $42, but if that’s broken, then yes, under $40 will certainly be the target,” said John Kilduff, founding partner at New York energy hedge fund Again Capital.
Saudi-led OPEC and its non-member allies led by Russia agreed in early December to collectively cut production by a total of 1.2 million barrels a day during the first six months of 2019 in an effort to stave off a global glut in supplies.
Should that fail to balance the market, OPEC and its allies will hold an extraordinary meeting, United Arab Emirates Energy Minister Suhail al-Mazrouei said on Sunday.
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Source: Investing.com
