WTI crude tumbled further into a bear market amid signs of a global glut. Brent, the benchmark grade for more than half the world’s oil, traded close to a four-year low.
US crude slumped as much as 2.5 percent to $83.59 a barrel in New York. It closed yesterday more than 20 percent below its June peak, a common definition of a bear market. Brent is down 22 percent over a similar period and retreated 0.6 percent to $89.48 at 12 p.m. in London.
The world’s two most-traded crude futures are collapsing because demand growth is slowing at a time when output is expanding from countries including the U.S. and Russia, the largest suppliers outside OPEC. The Organization of Petroleum Exporting Countries increased oil production by the most in almost three years last month.
WTI was 1.2 percent lower $84.73 a barrel at 12:04 p.m. in London. The contract decreased 1.8 percent to $85.77 yesterday, the lowest close since December 2012.
Brent for November slid as much as $1.94, or 2.2 percent, to $88.11 a barrel on the London-based ICE Futures Europe exchange. It’s poised for a third weekly loss. The European benchmark crude traded at a premium of $4.81 to WTI, compared with $2.57 on Oct. 3.
OPEC increased output by 402,000 in September to 30.47 million barrels a day, the group said in its monthly oil market report today. It was the biggest monthly gain since November 2011 and the largest production in more than a year. The organization predicted demand will accelerate in the next few months.
Saudi Arabia and Iran, both OPEC members, are discounting their main crude export grades to Asian buyers by the most in almost six years, prompting speculation some OPEC nations are competing for market share.
U.S. oil output increased to 8.88 million barrels a day last week, the most since March 1986, according to the Energy Information Administration. Crude inventories in the world’s biggest oil consumer gained by 5 million barrels to 361.7 million in the week to Oct. 3, the EIA, the Energy Department’s statistical arm, said on Oct. 8.
Russia increased output 0.7 percent to 10.61 million barrels a day last month, according to preliminary data from CDU-TEK, which is part of the Energy Ministry. The figure is within 0.3 percent of the post-Soviet record in January and is for crude and condensates, a type of oil that yields a greater proportion of high-value fuels.