Crude Oil Drops to $29; Stocks Around the World Plunge

Chinese economic data and Iranian crude supply worries led to the rout in the benchmark futures during today’s trade.

West Texas Intermediate, the USA benchmark, was down 4.6 percent to $29.75 per barrel for its worst open in more than 10 years.

The key stock indices in Europe were two percent down when the markets closed.

Oil market on Thursday at GMT 15.31, Brent $30.77 (+0.46) and WTI $31.40 (+0.92).

“As a result, oil prices should continue to remain low, where a sustained pick up is expected only in the third quarter of 2017”, he said in a market commentary.

Crude oil had held off a prolonged dip below a psychological threshold of $30 per barrel during a week of stock market slumps, but finally gave in during trading early Friday in NY.

Still, Brent crude futures held above $30 per barrel after slipping below the level the previous day.

“Iran’s going to put 500,000 barrels per day more on the market”, at a time when global supplies already exceed demand for oil by about 2 million barrels a day, said James Williams of WTRG Economics. “It would have been so much more ideal for Iran to return to the oil scene if prices were soaring at $100”, Phillip Futures said in a note, quoted by Reuters. Year on year, US Gulf regular unleaded gasoline was 31.5 cents/gal lower. Worldwide sanctions on Tehran may be lifted Monday, allowing the fifth-biggest member of OPEC to boost oil exports.

Crude capped a second annual loss in 2015 as OPEC effectively abandoned output limits amid a global surplus.

“I tend to think about lower oil prices on balance as being good news for the world economy, certainly good news for the European economy, maybe modestly good news for the USA economy”, he said.

Oil and gas projects worth $380 billion have now been postponed or cancelled since 2014 as companies slash costs to survive the oil price crash, including $170 billion of projects planned between 2016 and 2020, according to a report from energy consultancy Wood Mackenzie.

“There’s increased chatter about new Iranian barrels coming to the market very quickly as the IAEA (International Atomic Energy Agency) supposedly is going to verify over the weekend that Iranians have done enough to verify their side of the sanction deals”, Yawger said.

Iran stated that its exports will rise by 1 million barrels a day within the first six months of the sanctions being lifted.