Oil prices ‘shellacked’ in worst week in almost 3 years as glut fears grow
Oil notched its biggest NEW YORK weekly loss since the depths of the last price crash, as record Saudi output, pressure from U.S. President Donald Trump and a global stock sell-off intensified crude’s free fall.
Futures slid below US$60 in London on Friday and ended the week down about 12 per cent, the worst showing since January 2016. Traders focused on the growing risks of a new glut of crude after Saudi Arabia’s oil minister said Thursday that production from the world’s largest exporter had climbed further this month. Oil joined a swoon in equity markets nervous about international trade and a weakening economy. The S&P 500 Index fell to its lowest mark since May while European markets lost ground after a report showing a slowdown in Germany.
Energy companies led declines, with shale drillers Concho Resources Inc. and Devon Energy Corp. each down more than five per cent.
“Crude’s getting shellacked,” said Kyle Cooper, director of research at energy consultant IAF Advisors in Houston. “The equities are giving a foreboding sign for overall economic growth. I think that’s what’s disturbing people.”
In the U.S., West Texas Intermediate oil prices slid toward US$50 a barrel, the baseline at which many large shale explorers set their budget this year, RBC Capital Markets analyst Scott Hanold said in a note to clients. Smaller producers planned on even more, predicating budgets on WTI prices 10 to 15 per cent higher, he wrote.