US oil prices plunge, traders say – Reuters
Forex trading on Friday was on course to trade below $100 a barrel for the first time since June, with investors concerned about what that would mean for prices and the prospects for global growth.
The decline came amid a rally in crude oil and other energy products that was prompted by President Donald Trump’s withdrawal of the U.S. from the Paris climate accord and the Federal Reserve’s interest rate hike.
The drop was the worst since May 2016, when oil prices plunged by more than half to $36 a barrel.
Brent crude oil, the international benchmark, fell nearly 4 percent to $38.20 a barrel in New York trading.
The European Union said it would increase taxes on energy exports and impose a levy on companies that use the North Sea to ship their products, while the United States and Canada imposed new tariffs on Chinese imports.
The slide in the price of oil has also affected bond markets, and it could impact financial markets.
Forex traders in Europe and the U and Asia had been betting on a rebound in oil prices, but traders said they were not expecting a sustained rally.
Brent oil, a major U.N. benchmark, was up 2.2 percent to US$38.25 a barrel on Thursday.
That was well below the level of US$50 a barrel that it hit in late May.
Brent has declined to a near five-year low in September and has since dropped to about US$35 a barrel, below the current level of $70.
Forecasts for a sharp rebound in global oil prices have been mixed, with some analysts forecasting that they will not rise further this year, while others say prices are unlikely to rise at all.
On Friday, Brent crude futures rose 0.7 percent to settle at $38-40.24 a barrel by 10:30 a.m. in New Delhi, down from the $39.30 a barrel it reached in late April.
Brent also fell sharply to US $40.55 a barrel late on Thursday, which was the lowest price reached since June of 2016.
Brent rose to a 52-week high of $50.04 a barrel earlier this week, and is currently trading at $43.90 a barrel according to data from Bloomberg.
The U.K. government on Friday said it was raising its budget deficit forecast to 5.9 percent of gross domestic product in 2019-20 from 4.7 per cent.
A higher budget deficit would push Britain into a debt-driven recession by 2026, the British government said in a statement.
Forecasters also expect economic growth to pick up next year, after a recession hit global markets in 2016.
U.Y.O. stocks surged in early trading on Wall Street on Friday, rising for the year.
Brent, the world’s benchmark crude, fell about 3.2 million barrels a day to $44.30.
Brent is down about 5 percent this year and is still up more than 30 percent from its June peak.