Oil’s continued plunge accelerated taking cues from the global selloff in equities with West Texas Intermediate settling just under $39 a barrel, its lowest settlement in more than six years, on concerns over the outlook for the global economic growth.
Light sweet Crude for October delivery plunged by more than $2.21 or 5.1% to end at $38.24 a barrel on the New York Mercantile Exchange after touching an intraday low of $37.75 a barrel.
The US benchmark, on track for an 18% monthly drop, recorded its eighth consecutive weekly drop last week, its longest losing streak in more than 26 years.
Brent for October delivery slipped $2.77 or 6.1% to $42.69 a barrel on the ICRE Futures Exchange in London.
“It’s part and parcel of what’s happening in the stock market,” Phil Flynn, senior energy analyst with the Price Futures Group, told USA Today.
“You’re looking at a lot of fear in the markets.”
Oil prices have been under pressure for several months now on concerns over the continued global oil glut but the pressure intensified in the last weeks over worries over China’s economic growth after the Country’s central bank recently devalued the country’s currency.
On Monday the benchmark Shanghai Composite Index ended 8.5 % lower, its biggest one day percentage decline since September 2007.
“Today’s falls are not about oil market fundamentals. It’s all about China,” Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, told the Reuters Global Oil Forum.
“The fear is of a hard landing and that things get out of the control of the Chinese authorities.”
The commodity’s near 40% drop since its late June peak has set off alarm bells among some of the most affected OPEC members with talk of the possible convention of an emergency meeting to discuss measures to take.
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