Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.
Find out more at btsub.sg/promo
[LONDON] Oil in London slid below US$45 a barrel for the first time since March 2009 on concerns Chinese demand is slowing just as supplies from the US and Iran threaten to swell a global surplus.
Brent futures fell as much as 4.8 per cent, extending a 7.3 per cent drop last week that was the biggest in five months. Commodities sank to the lowest in 16 years on forecasts for the weakest Chinese growth since 1990.
Iran's Oil Minister Bijan Namdar Zanganeh vowed to expand output "at any cost," according to the ministry's news website. The number of active oil rigs in the US rose for the seventh time in eight weeks, Baker Hughes Inc data showed Friday.
Oil's worsening global surplus has driven prices down by more than 30 per cent since May, prompting hedge funds to cut bullish bets to a five-year low. Iran aims to join leading members of the Organisation of Petroleum Exporting Countries in raising production while US crude stockpiles are almost 100 million barrels above the five-year seasonal average.
"There is no end in sight to the nose-dive that oil prices have been experiencing," Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report.
"It is impossible to say how long the price slump will continue and where oil prices will ultimately bottom out."
Brent for October settlement declined as much as US$2.18 to US$43.28 a barrel on the London-based ICE Futures Europe exchange and was at US$43.71 at 11:32 am London time. The contract lost US$1.16 to US$45.46 on Friday. The European benchmark crude traded at a US$4.84 premium to West Texas Intermediate, the US marker grade.
WTI for October delivery decreased as much as US$1.76, or 4.4 per cent, to US$38.69 a barrel on the New York Mercantile Exchange, the lowest price since February 2009. Prices fell 4.8 per cent through Friday for an eighth weekly drop, the longest retreat since 1986. Total volume was almost double the 100-day average.
The Bloomberg Commodity Index of 22 raw materials fell as much as 2.2 per cent to the lowest level since August 1999 as China's economic slowdown exacerbated surpluses from oil to metals. The Asian nation is the world's biggest energy consumer.
Crude's slump triggered losses in related equities. Royal Dutch Shell Plc, Europe's largest oil company by revenue, fell as much as 3.5 per cent to 1,634 pence a share, the biggest drop in more than four months.
"The Chinese growth slowdown continues to weigh," Michael Poulsen, an analyst at Global Risk Management Ltd. in Middelfart, Denmark said in a report. "Markets are still worried about the reduced growth pace in this huge country. The supply-demand situation still points to a surplus of oil in the market."
Iran was OPEC's second-largest producer before international penalties over its nuclear program began in mid-2012. The country will seek to regain oil sales regardless of prices, Mr Zanganeh said last month after negotiators reached a deal with world powers offering sanctions relief.
OPEC, which supplies about 40 per cent of the world's crude, has pumped above its quota of 30 million barrels a day for more than a year, according to data compiled by Bloomberg. Iran's output trailed that of Saudi Arabia and Iraq in July.
In the US, the rig count climbed by 2 to 674 through Aug 21, according to Baker Hughes, an oilfield-services company. That's the highest level since May 1.