The bears clawed their way to the top of an unstable oil futures market as both West Texas Intermediate and Brent crude fell sharply on Monday, according to Bloomberg MarketWatch.
On the New York Mercantile Exchange, September WTI crude dropped $1.54, or 3.7%, to end at a three-month low of $40.06 a barrel, allowing the bears to take control of the bulls on Monday.
A bear market is defined as a fall of 20% from a recent peak. The WTI contract is officially down 21.8% from a 52-week high of $51.23 a barrel in early June. WTI futures briefly traded below the $40 a barrel benchmark before rallying at the close of day.
WTI futures have retreated sharply from their June peak “as traders shrug off expectations of increasing global fuel demands in the coming year and declining North American production levels, while they focus on near glut levels of supply and the end of unplanned supply disruptions (Nigeria, Libya and Canada) of the past couple of months,” wrote analysts at Tradition Energy, in a Monday note.
On the London ICE Futures Exchange, October Brent crude, the global benchmark, slid $1.39, or 3.2%, to settle at $42.14 a barrel.
Investors will closely monitor OPEC’s monthly oil market report scheduled for release on August 10. OPEC production has risen in Iran, Iraq and Saudi Arabia in recent months.
Meanwhile, September natural gas futures fell 10.5 cents, or 3.7%, to end trading at $2.771 per million British thermal units on the New York Mercantile Exchange.