WTI Crude Slips Below $90 for First Time in 17 Months
West Texas Intermediate oil fell below $90 for the first time in 17 months amid signs that supplies from Russia, Saudi Arabia and the U.S. are outstripping demand.
WTI futures dropped as much as 2.8% to $88.18 a barrel in New York, bringing the decline to 9.9% this year. Declines in WTI below $90 would slow U.S. production, Goldman Sachs Group Inc. said Oct. 1. The nation’s output will rise next year to the highest since 1970, the Energy Information Administration forecast Sept. 9.
The shale boom has turned the U.S. into the world’s largest producer of liquid petroleum, reducing its appetite for imports just as global demand growth slows. Saudi Arabia, the world’s largest oil exporter, cut its official selling price for crude to Asia Oct. 1 to the lowest since 2008. Russian data showed the country’s output rose to a near post-Soviet era record. Kurdistan’s oil production over the next 15 months may increase by more than Chinese demand growth over the period.
“We have more than enough supply out there and demand is not catching up,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “U.S. production is just incredible. Fundamentally we are just producing so much oil.”
WTI for November delivery traded at $88.73 a barrel in London. It’s below $90 for the first time since April 24, 2013. Futures declined 13% in the three months to Sept. 30, the worst quarterly performance in more than two years.
Average retail gasoline prices in the U.S. fell to $3.328 a gallon Oct. 1, the lowest since February, according to data from the Automobile Association.
U.S. crude oil production rose to the highest level since 1986 last month, while OPEC output climbed to the highest in a year. The International Energy Agency last month reduced its projections for demand growth this year and in 2015, citing a weakening economic outlook.
U.S. producers may halt rigs and low production if WTI “keeps falling below $90,” Jeff Currie, Goldman Sachs’s head of commodities research, said in an interview in London.
