The global crude benchmark fell below $50 a barrel for the first time since January amidst concerns over a world-wide oil glut and weak US and Chinese Economic data.
Light sweet crude for September delivery most recently lost $1.92 or 4.12% to trade at $45.35 a barrel on the New York Mercantile Exchange.
Based on the most active contracts, this is the lowest the US benchmark has traded in over four months.
Brent futures, the global benchmark, most recently traded $2.70 or 5.13% lower at $49.74 a barrel on the London based ICE Futures Exchange.
The commodity’s selloff on Monday comes just a few weeks after it entered the bear market on evidence of a global supply gut and a selloff in equities in China, the world’s biggest energy consumer, amidst weak economic data in the country.
“The main oil demand growth engine of the world [is China, and it] may not be leading the global oil rebalancing effort anytime soon,” Dominick Chirichella, analyst at the Energy Management Institute told the Wall Street Journal.
“Supply is likely to remain robust for the foreseeable future, prolonging the long awaited rebalancing of the global oil market.”
Most traders, however, pinned the massive losses on Monday to the latest evidence that production levels were not going down with oilfield services provider, Baker Hughes on Friday reporting a growth in the number of active oil rigs in the US for the second straight week.
Also weighing the prices down was a report by the Institute for Supply Management earlier in the day showing that manufacturing activity in the US fell more than expected in the month of June.
The data, coupled with a report by the Commerce Department showing that doubts about the outlook for crude demand in the US.
“Economic weakness has set the tone,” Matt Smith, director of commodity research at ClipperData, a New York-based energy database, told Reuters.
“But the gasoline crack spread is also unraveling.”
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