10th October 2014
West Texas Intermediate (WTI) crude oil futures have extended their slide into a bear market today (October 10th), tumbling further amid signs of a significant global surplus of the commodity.
Prices for both WTI and Brent crude have slumped as traders note evidence that shows demand growth is slowing at the same times as output from the US and Russia - the largest suppliers outside of the Organization of Petroleum Exporting Countries (OPEC) - are stepping up production levels.
OPEC members Saudi Arabia and Iran have started to discount their main crude export graded for Asian buyers by the most in almost six years, leading to speculation several member nations are beginning to compete for market share.
Speaking to Bloomberg, Nordea Markets analyst Thina Saltvedt said: "It's been a massive sell-off.
"There are no trigger points to drive prices up. The Asian market is flooded with oil. There are more and more signs that OPEC doesn’t co-operate well these days and it doesn’t look good if OPEC isn’t willing to tighten things up."
According to the Energy Information Administration, US oil output rose to 8.88 million barrels per day last week - the highest since March 1986. Crude inventories in the country, the world's largest oil consumer, increased by five million barrels to 361.7 million in the week.
Preliminary data from the Energy Ministry in Moscow shows Russia stepped up its output by 0.7 per cent to 10.61 million barrels per day last month. This is just 0.3 per cent lower than the post-Soviet record set in January.
OPEC is responsible for around two-fifths of the world's oil supply and produced 30.935 million barrels per day in September. It is thought the 12-member group is preparing to cut either its output or formal production targets at its next meeting on November 27th.
Early in the European trading session, WTI for November delivery was down by 1.6 per cent at $84.42 per barrel. The contract closed at $85.77 yesterday, its lowest finish since December 2012.
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