By BUSINESS REPORTER –
THE prices of oil in the United States (US) yesterday remained below the widely watched $30-per-barrel level they reached on Tuesday for the first time in 12 years.
They had fallen briefly below the widely watched $30-per-barrel level, extending a sell off that has sliced almost 20 per cent of prices this year.
A seven-day losing streak fuelled by concerns about a continued supply glut and fragile demand from China, the world’s second largest consumer, wiped out almost a fifth of crude prices this year and 70 per cent since mid-2014.
Reuters reports that traders have all but given up attempting to predict where the new-year rout will end, with momentum-driven dealing and overwhelmingly bearish sentiment engulfing the market.
Some analysts warned of $20 a barrel while Standard Chartered said fund selling may not relent until it reaches $10.
By Tuesday, the crash had become almost self-fulfilling, with speculators too afraid to buy for fear of being burned by another false bottom.
The slide appeared to first accelerate when it broke below the $32 area.
The $30 mark is both a psychological and financial threshold.
In recent days, traders have poured money into $30 and put options for expiration in February and March.
Hedging activity usually picks up as oil prices near big options level, as buyers and sellers defend their interests.
More than 15,000 contracts traded on Tuesday and 18,000 contracts traded on Monday for the February contract, more than doubling Friday’s volumes.
The US West Texas Intermediate crude fell by 97 cents to settle at $30.44 a barrel, a 3.1 per cent loss, after touching a low of $29.93, which was last seen in December 2003.