The world’s benchmark oil price fell to less than $50 a barrel Monday for the first time in six months as a sluggish global economy and rampant oil boom keep crude markets falling.
Monday’s selloff widens losses from July that plunged oil into a bear market. Record production in the U.S. has led to an international competition to produce even more, cut prices and fight for customers around the world. The past week brought signs that production is still going strong, dashing hopes that low prices may force producers to slow down.
Monday brought ominous signs on the demand side, suggesting the global economy may not ramp up enough to absorb all the oil. Chinese manufacturing activity fell to a two-year low, according to data released Monday, clouding the demand outlook for the world’s second-biggest oil consumer. Brazil, India, and Russia also slowed, further indications of tepid demand growth around the world, wrote Tim Evans, analyst at Citi Futures Perspective in New York, in a note.
“The prospects of a second half-year price rebound have evaporated and there is a clear and present danger of prices revisiting the previous lows of the year,” said David Hufton of oil brokerage PVM.
Brent, the global benchmark, took the larger losses of the day, falling, $2.69, or 5.2%, to $49.52 a barrel on ICE Futures Europe. It was its largest one-day losses since July 6 and the lowest settlement since Jan. 29.
Light, sweet crude for September delivery settled down $1.95, or 4.1%, to $45.17 a barrel on the New York Mercantile Exchange. It is within $2 of the six-year low settlement price it hit in March.