When will oil prices’ epic losing streak come to an end?

Keep pumping.
Keep pumping.
Image: Reuters/Ernest Scheyder
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Oil prices have plunged amid worries of far too much supply and signs that global demand for energy is fading. It’s a remarkable turnaround from just a few week ago, when traders were bracing for US sanctions on Iran to do the opposite: push up prices by throttling back the amount of oil coming to market.

US West Texas Intermediate (WTI) crude oil futures, down from more than $70 in October, showed signs of stabilizing today at around $55.70 per barrel after dropping for a record 12 straight days. International benchmark Brent crude oil futures have fallen to $65.90 per barrel, down from a recent high of more than $80.

Worries about the Trump administration’s sanctions on Iran—which has the world’s fourth-largest oil reserves—may have “masked” weakness in the underlying energy market, according to Reuters market analyst John Kemp. The US gave waivers to those restrictions to eight major oil importers, suggesting the crimp in supply may not be as intense as feared.

At the same time, production from nations outside of Organization of the Petroleum Exporting Countries (OPEC) accelerated, and “consumption growth showed signs of slowing,” Kemp said. Output from Russia, Saudi Arabia, and the US has climbed to record levels, according to the International Energy Agency (IEA).

Likewise, some major economies, buffeted by the Trump administration’s trade war, could be losing steam. Japanese and German gross domestic product contracted in the third quarter, according to statistics released today, signaling diminished demand for energy.

And the outlook is still far from certain. Iran is producing around 1.8 million barrels of oil each day, according to the IEA, but the US says it’s committed to reducing the country’s exports to zero. The only safe bet is that more turbulent days could be ahead.