You are here: Home » International » News » Markets
Business Standard

US crude falls below $28; IEA warns market could drown 'in oil'

The last time WTI closed below $28 was in September 2003

AFP/PTI  |  Singapore 

Image via Shutterstock
Image via Shutterstock

US crude tumbled below $28 a barrel in Asia today, hitting new 12-year lows, after the Energy Agency (IEA) warned that the oil market could "drown in oversupply".

West Texas Intermediate (WTI), the US benchmark, struck a low of $27.92 a barrel at one point before recovering. It was trading at $28.15, down 31 cents, or 1.09%, at around 0240 GMT.

The last time WTI closed below $28 was in September 2003.

Brent crude -- which briefly fell below $28 on Monday -- was 13 cents lower at $28.63.

"The EIA report played a big part in the price decline," said Phillip Futures analyst Daniel Ang, adding that this underscored the current "bearishness in the market".

He also said the WTI February contract was due to expire later in the week, which could have prompted traders to roll over their positions to the March contract.

The EIA yesterday said oil prices are set to fall further this year as supply vastly exceeds demand, with major oil exporter Iran's return to the market offsetting any production cuts from other countries.

"Can it go any lower?" the IEA said. "Unless something changes, the oil market could drown in oversupply. So the answer to our question is an emphatic yes. It could go lower."

The market has been awash with supplies owing to high production levels in the US and in the OPEC cartel, which last year rejected calls to slash output as it looks to maintain its market share.

Prices have crashed about 75% since mid-2014, hit by a perfect storm of a supply glut, weak demand, a slowing global economy and a strong dollar.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, January 20 2016. 10:02 IST
RECOMMENDED FOR YOU
.