(Bloomberg) — Oil plunged, approaching its lowest level in five months, amid more signs of robust supplies.
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West Texas Intermediate plunged as much as 3.4% to below $69 a barrel, near the lowest since late June. Crude has slid for seven straight weeks, with even new output cuts by OPEC and its allies failing to halt the skid. In a fresh sign that supplies remain ample, the weekly average of Russia’s seaborne crude exports jumped to the highest level since early July.
Spreads between monthly contracts continue to indicate oversupply, with the front end of the Brent futures curve this week closing at the weakest level since June.
“Futures are trying to solidify a bottom from last week’s selloff,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. “The contango structure of back-month futures gaining on front month is setting the tone that current supplies seem ample.”
Oil is on the longest weekly losing streak since 2018 and is down by about a fifth from a peak in late September. Forecasts for slowing Chinese consumption growth and lingering risks of recession in the US are making for a gloomy demand outlook in the first quarter.
“Sentiment remains negative,” said Tamas Varga, an analyst at broker PVM Oil Associates Ltd. “The fundamental backdrop is discouraging,” and “there is no help coming from the demand side of the oil equation.”
–With assistance from Yongchang Chin.
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