NEGOTIATOR’S TAKE: $40 Crude brings opportunity to negotiate lower prices for a wide variety of products |
08.12.16 – Crude settles at $40.06 a barrel, down from early June –
Oil prices entered a bear market, briefly dipping below $40 a barrel, underscoring the deep concerns over a supply glut that has plagued the industry for two years.
Crude for September delivery finished down $1.54, or 3.7%, to $40.06 on the New York Mercantile Exchange on Monday, marking the ninth time in 11 sessions that prices have closed lower. Prices have dropped 22% in less than two months, ending a rally that took prices above $50 in early June.
“We need to be prepared for lower prices and volatility,” Ryan Lance, chief executive of ConocoPhillips, said during a conference call last week. “It’s going to take well into 2017 before we see any real increases in prices.”
New bear market the 5th since two-year high in 2013
The oil market has repeatedly rallied during its long-running bust, only to falter and head back down. This bear market is the fifth since oil hit a two-year high above $100 a barrel in 2013. The culprit is a glut that has left the market awash in oil despite record demand for gasoline in the U.S.
Production by the Organization of the Petroleum Exporting Countries was near its all-time high in July, and Saudi Arabia’s state oil company recently made some of its deepest price cuts in years. Canadian production has come back after wildfires caused temporary outages.
SOURCE: Wall Street Journal