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Oil falls below $70 as U.S. crude enters "bear market"

Reuters  |  LONDON 

By Christopher Johnson

LONDON (Reuters) - prices fell to multi-month lows on Friday as global supply increased and investors worried about the impact on fuel demand of lower economic growth and trade disputes.

Benchmark Brent crude fell below $70 a barrel for the first time since early April, down more than 18 percent since reaching four-year highs at the beginning of October.

Brent fell 95 cents to a low of $69.70 before recovering slightly to trade around $69.85 by 1030 GMT, down 4 percent for the week and more than 15 percent this quarter.

U.S. light crude fell to an eight-month low below $60 a barrel, hitting a trough of $59.78, down 89 cents and off more than 20 percent since early October. That puts the U.S. contract officially in "bear market" territory, borrowing a definition commonly used in stock markets.

"There is no slowing down the bear train," said Stephen Brennock, PVM "Instead, the has extended a rout driven by swelling global supplies and a softening demand outlook."

peaked in October on concerns that U.S. sanctions on that came into force this week would deprive the of substantial volumes of crude, draining inventories and bringing shortages in some regions.

But other big producers, such as Saudi Arabia, and shale companies in the United States, have increased output steadily, more than compensating for lost Iranian barrels.

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

The U.S. sanctions, meanwhile, are unlikely to cut supply as much as expected. has granted exemptions to Iran's biggest buyers, allowing them to buy limited amounts of oil for at least another six months.

said it was still taking oil from Iranian fields in which it has stakes.

has said it wants to force Iranian down to zero, but Bernstein Energy now expects "Iranian exports will average 1.4 million to 1.5 million bpd" during the exemption period, about half the volume in mid-2018.

"As OPEC exports continue to rise, inventories continue to build, which is putting downward pressure on oil prices," Bernstein said. "A slowdown in the global remains the key downside risk to oil."

A glut in the refining sector, where a wave of unsold gasoline has pulled profit margins into negative territory, may also lead to a slowdown in new crude orders as refiners scale back operations.

(Reporting by in London and Henning Gloystein in Singapore; Editing by Dale Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, November 09 2018. 16:17 IST