The primary US crude oil benchmark has slipped into bear market territory – a drop of over 20 per cent from its recent peak – a move that renews pressure on the energy industry and oil-dependent countries.
West Texas Intermediate has slipped from an intraday high of $51.67 per barrel on June 9 to $41.14 on Thursday afternoon, a drop of 20.4 per cent, as a glut in oil-derived products has once again weighed on demand for the commodity, writes Robin Wigglesworth.
Oil prices are still comfortably above the nadir touched at the start of the year and Brent oil, the North Sea benchmark that is the most used international measure of crude prices, is still hovering just over bear market territory, falling 19.2 per cent since its June peak.
Energy stocks have held up better than they did in the oil crashes of earlier this year and 2015, but slipped 0.2 per cent on Thursday – while the broader S&P 500 gained 0.2 per cent – and have lost 4.4 per cent since the peak earlier this month.
“Investors need to keep an eye firmly on oil prices at the moment,” Nicholas Colas, chief market strategist at Convergex, said in a note. “Crude oil price volatility is clearly moving higher, and history says that it is a setup for a move lower for stocks since crude prices are declining.”