Oil markets on Friday remained weak as rising supply and concerns of an economic slowdown pressured prices, with U.S. crude now down by 20% since early October. U.S. West Texas Intermediate (WTI) crude oil futures were at US$ 61.63 per barrel.
Front-month Brent crude oil futures were at US$ 70.79 a barrel, 14 cents above their last close. However, both Brent and WTI have declined by around 20% from four-year highs in early October.
“Oil prices continue to decline and are now officially in a bear market, having declined 20% from their (October) peak,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
Analysts said the main downward price pressure came from rising supply, despite the U.S. sanctions against Iran that were imposed this week, as well as concerns over an economic slowdown.
“As OPEC exports continue to rise, inventories continue to build which is putting downward pressure on oil prices,” analysts at Bernstein Energy said. “A slowdown in the global economy remains the key downside risk to oil,” Bernstein added.
The decline in prices over the past weeks follows a rally between August and October when crude was pushed up ahead of the re-introduction of sanctions against Iran’s oil exports on November 5.
These sanctions, however, will unlikely cut as much oil out of the market as initially expected as Washington has granted exemptions to Iran’s biggest buyers which will allow them to continue buying limited amounts of crude for at least another six months.