Crude oil prices plummeted to a record low on Tuesday over fears of excess supplies due to a slowdown in demand, according to reports. US oil prices plunged 7% to a one-year low of $55.69 (Rs 4,017) a barrel, marking the biggest one-day drop since September 2015.
West Texas Intermediate futures, or US crude, have fallen for a record 12 sessions over fears that a supply glut similar to the surplus of 2014 is redeveloping, Bloomberg reported. The US crude is on its longest losing streak since it began trading in New York in 1983, reported CNBC. It was at $55.69 on Tuesday, its lowest closing price since November 16, 2017.
In London, Brent futures have declined in 11 of the past 12 sessions. This is a reversal from the four-year high of $76 a barrel that US crude had risen to in early October.
According to CNBC, crude futures rose to four-year highs on October 3 ahead of US sanctions on Iran, which is the third biggest producer of the Organisation of the Petroleum Exporting Countries, or OPEC. In September, around 8,00,00 barrels were sold over threat of sanctions, which led to speculation that some oil importers may struggle to find supplies. This left oil prices “vulnerable to a pullback as the stock market was about to sell off”.
The OPEC has given a dire forecast for demand in 2019 even as production in the US and stockpiles have increased. On Sunday, Saudi Arabia, which is also a member of OPEC, said it would reduce oil exports by half a million barrels a day in December.
Meanwhile, President Donald Trump said he hoped Saudi Arabia’s decision would not affect oil production. “Hopefully, Saudi Arabia and OPEC will not be cutting oil production,” Trump tweeted on Monday afternoon. “Oil prices should be much lower based on supply!”