WTI Crude Falls Below $80 for First Time Since June 2012

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West Texas Intermediate crude fell below $80 a barrel for the first time since June 2012 amid speculation rising U.S. supplies are exacerbating a global glut. Brent fell to its lowest in nearly four years.

Futures slid as much as 2.4 percent in New York, declining for the seventh time in eight days. WTI’s losses have accelerated since it dropped below $100 a barrel in July. The contract plunged about 25 percent in the past three months.

Prices have collapsed amid speculation that Saudi Arabia and other members of the Organization of Petroleum Exporting Countries will refrain from cuts needed to drain a surplus, according to Commerzbank AG.

“Eighty is the new $100,” Eugen Weinberg, Commerzbank’s Frankfurt-based head of commodities research, said by phone. “OPEC still seems to be waiting for the market to find a bottom. For the longer-term $80 should be a solid floor.”

WTI for November delivery dropped as much as $2 to $79.78 a barrel in electronic trading on the New York Mercantile Exchange and was at $80.35 at 1:43 p.m. London time. It traded below $80 for the first time since June 29, 2012. Prices have decreased 18 percent this year.

Brent for November settlement, which expires today, declined as much as $1.18, or 1.4 percent, to $82.60 a barrel on the London-based ICE Futures Europe exchange, the lowest since November 2010. The more-active December contract was down 92 cents at $83.20. The European benchmark traded at a premium of $2.74 a barrel to WTI on ICE.

Bear Market

Oil futures have collapsed into bear markets as shale supplies boosted U.S. output to the highest level in almost 30 years amid signs of weakening global demand. The largest producers OPEC are responding by cutting prices, sparking speculation that they will compete for market share rather than reduce supply.

“Production from oil shale continues to grow,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “There’s a general lack of confidence. $80 a barrel is a psychological level.”

U.S. crude stockpiles probably increased to 364.1 million barrels in the week ended Oct. 10, according to the median estimate of 10 analysts surveyed by Bloomberg before today’s report from the Energy Information Administration. Production climbed to 8.88 million a day through Oct. 3, the most since March 1986, said the Energy Department’s statistical arm.

U.S. Inventories

Crude inventories in the U.S., the world’s biggest oil consumer, expanded by 10.2 million barrels last week, the industry-funded American Petroleum Institute in Washington reported yesterday, according to Bain Energy.

Regular gasoline in the U.S. fell to the lowest level since February 2011. The average retail price was down 1.4 cents to $3.163 a gallon, according to Heathrow, Florida-based AAA, the nation’s biggest motoring group.

Global oil demand will rise by 650,000 barrels a day this year, the slowest growth since 2009, the International Energy Agency in Paris said in its monthly report on Oct. 14. That’s a reduction of 250,000 from a prior forecast.

Oil’s collapse is just about over, according to some of the world’s largest banks. Crude will trade above $80 a barrel, Bank of America Corp. and BNP Paribas SA predict, while Commerzbank AG sees that level as a possible low for Brent. They’re in part counting on OPEC to reduce output, possibly as soon as next month, to compensate for shrinking demand.

OPEC, which supplies about 40 percent of the world’s oil, is increasing production even as demand growth falters. The 12-member group pumped 30.47 million barrels a day in September, the most since August 2013, according to its monthly report on Oct. 10.

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