Crude prices notched fresh yearly lows on Monday, highlighting the extent of the bearish downturn since October and offering little hope that a recovery was imminent.
U.S. and international futures prices fell further into bearish territory in a holiday-shortened session ahead of Christmas Eve. West Texas Intermediate (WTI) for February settlement bottomed at $44.35 a barrel on the New York Mercantile Exchange, the lowest since August 2017. WTI was last down $1.20, or 2.6%, at $44.40 a barrel.
Brent crude, the international futures benchmark, notched a fresh 17-month low of $52.62 a barrel, having declined $1.19, or 2.3%, from Friday’s close.
Crude prices have lost a staggering 40% from their October peak and efforts by global producers to rein in output have failed to stem the decline. Earlier this month, the Organization of the Petroleum Exporting Countries (OPEC) and its allies announced plans to cut production by 1.2 million barrels per day. Traders are skeptical whether the proposed measures will have the desired effect of draining excess supply from the market amid signs of declining demand and rising U.S. output.
Energy commodities failed to capitalize on a weaker dollar, which fell half a percent against a basket of competitor currencies. The U.S. dollar index was last seen trading at 96.51.
OPEC Getting Desperate
The Saudi-led cartel has reportedly said it will do ‘whatever it takes’ to save oil from further collapse. This includes the possibility of additional production cuts if the current strategy fails to lift prices.
The possibility of an additional round of cuts was raised by the United Arab Emirates, one of Saudi Arabia’s closest allies in the region. According to Bloomberg, the UAE’s energy minister believes that the proposed cut of 1.2 million barrels per day will likely clear the large inventory buildup in the first half of 2019.