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Crude in London slid below $45 a barrel for the first time since March 2009 on concerns Chinese demand is slowing just as Iran and the US threaten to expand a global glut. Brent oil fell as much as 6.5 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 as forecasts for the weakest Chinese growth since 1990 spurred investors to seek out the safest assets. US energy companies declined as much as six per cent on the Standard & Poor's 500 index. Losses eased after equities pulled back from the brink of a correction.
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 a seventh time in eight weeks, data showed Friday.
Oil's worsening global surplus has driven prices down by more than 30 per cent since May. Iran aims to expand its share of output in the Organization of Petroleum Exporting Countries while US crude supplies are almost 100 million barrels above the five-year seasonal average. "We're trading at 6 1/2 year lows and have further to go," Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. "The risk-off scenario continues to play out. The statements from the Iranian oil minister about fighting for market share didn't help."
Brent for October settlement declined $1.80, or 4 per cent, to $43.66 a barrel on the London-based ICE Futures Europe exchange at 12:51 pm New York time. Futures touched $42.51, the lowest since March 12, 2009. Brent oil traded at a $4.67 premium to West Texas Intermediate, the US benchmark. WTI for October delivery dropped $1.46, or 3.6 per cent, to $38.99 a barrel on the New York Mercantile Exchange. It reached $37.75, the lowest since February 24, 2009. Prices have decreased the past eight weeks, the longest retreat since 1986. Total volume was 43 percent above the 100-day average. The Bloomberg Commodity Index of 22 raw materials fell as much as three percent to the lowest level since August 1999 as China's economic slowdown exacerbated surpluses from oil to metals.
