Brent crude oil futures settled at its lowest since April today, and U.S. crude fell into bear market territory and ended below $49 a barrel for the first time since late March, as persistent concerns about ample supply and shaky demand offset support from the dollar’s weakness.
Reuters reports U.S. crude’s $48.45 a barrel settlement is down 21% from the June 10 close at $61.43. A 20% downturn is considered by many traders to constitute a bear market.
The weaker dollar supported oil early in trading today, but the U.S. currency trimmed losses after a report showing tumbling jobless claims in the United States. A weaker U.S. dollar makes greenback-denominated oil less expensive for consumers using other currencies.
The number of Americans filing new applications for unemployment benefits last week fell to its lowest level since 1973, suggesting a continuing solid pace for job growth.
“The dollar recovered from its lows and there is just a negative mood in commodities and for oil there is the worry that the global economy is going to affect demand,” says Phil Flynn, analyst at Price Futures Group in Chicago.
U.S. September crude fell 74 cents to settle at $48.45 a barrel, the lowest settlement since March 31. The session low of $48.21 was the lowest front-month intraday price since April 2. Brent September crude fell 86 cents to settle at $55.27, the lowest since April 2.
Both U.S. and Brent crude are on pace to post double-digit percentage monthly losses. Ample supply continues to weigh on oil futures. U.S. crude oil stocks rose 2.5 million barrels last week, according to Wednesday’s Energy Information Administration report, trumping expectations for a drop of 2.3 million barrels.
The supply glut looks set to grow as Iran’s nuclear deal with the West is expected to release millions of barrels of additional supply into the market. Global surpluses and concern about weakness in China’s economy also sent copper and aluminum to two-week lows today. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, fell 1.11%.
