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West Texas Intermediate oil dropped below $90 for the first time in 17 months amid signs that global supplies are outstripping demand. Brent, Europe's benchmark, headed for a bear market.
WTI fell as much as 2.8 percent to $88.18 a barrel in New York, bringing the decline to 9.9 percent this year. The U.S. benchmark pared losses. Brent has fallen 20 percent from its peak in June. Prices retreated yesterday after Saudi Arabia, the world's largest oil exporter, cut its official selling price for crude to Asia to the lowest since 2008.
"It's been slaughter the last few days," Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. "Supply has been outpacing demand and that doesn't appear to be changing anytime soon. We finally broke through $90 after yesterday's move by the Saudis showed that they're fighting for market share."
U.S. output will rise next year to the highest since 1970, the Energy Information Administration forecast Sept. 9. The shale boom has turned the U.S. into the world's largest producer of oil liquids, reducing its appetite for imports as global demand growth slows. Losses in WTI below $90 would slow U.S. production, Goldman Sachs Group Inc. said yesterday. Russian data showed the country's output rose to a near post-Soviet era record. Kurdistan's oil production over the next 15 months may increase by more than Chinese demand growth.
WTI for November delivery slipped 48 cents, or 0.5 percent, to $90.26 a barrel at 10:31 a.m. on the New York Mercantile Exchange. It fell below $90 for the first time since April 24, 2013. The volume of all futures traded was more than double the 100-day average for this time of day. Futures declined 13 percent in the three months to Sept. 30, the worst quarterly performance in more than two years.
November gasoline futures fell 5.14 cents, or 2.1 percent, to $2.3983 a gallon on the Nymex. Futures touched $2.387, the lowest level since January 2011. Average pump prices in the U.S. fell to $3.328 a gallon yesterday, the lowest since February, according to the Heathrow, Florida-based American Automobile Association Inc., the nation's largest U.S. motoring group.
Brent for November settlement tumbled $1.33, or 1.4 percent, to $92.83 a barrel on the London-based ICE Futures Europe exchange. It touched $91.55, the lowest since June 28, 2012. Volumes were 48 percent higher than the 100-day average. The grade traded at $2.57 premium to WTI, down from $3.43 at yesterday's close.
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