Crude Oil Prices Slump 20% From October Highs, Enter Bear Market

Darnell Taylor
November 10, 2018

In this context, just months after some fund managers and analysts warned Brent could hit $100 or higher by the end of the year, it now seems a decline back to $70 a barrel is far more likely.

West Texas Intermediate crude futures for December delivery dropped US$1 to settle at US$60.67 a barrel on the New York Mercantile Exchange, the lowest level since March. The global benchmark crude traded at a US$9.78 premium to WTI for the same month. That put it in "bear market" territory, borrowing a definition used in stock markets.

While the leading oil producer Saudi Arabia increased its output as promised, the USA government allowed waivers on its sanctions on Iran for some of the exporter's biggest customers, including India.

The United States, Russia and Saudi Arabia are pumping at or near record highs, producing more than 33 million barrels per day (bpd), a third of the world's oil.

The imposition of sanctions against Iran and those who do business with Iran has had a very limited impact on oil prices, due in large part to strong output from the USA and Russian Federation.

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These sanctions, however, will unlikely cut as much oil out of the market as initially expected as Washington has granted exemptions to Iran's biggest buyers which will allow them to continue buying limited amounts of crude for at least another six months.

Gas flares burn from pipes aboard an offshore oil platform in the Persian Gulf's Salman Oil Field, operated by the National Iranian Offshore Oil Co, near Lavan island, Iran.

"A slowdown in the global economy remains the key downside risk to oil", Bernstein added.

Iraq now pumps around 4.6 million barrels per day (bpd) of oil, second only to Saudi Arabia in the Organization of the Petroleum Exporting Countries or OPEC.

Meanwhile, with energy prices slumping, Opec and its allies will discuss scenarios including the possibility of cutting production again next year during a meeting in Abu Dhabi on Sunday, according to delegates.

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