SINGAPORE- Oil prices resumed their downward spiral in Asian trade Thursday following another massive sell-off in equities as traders grow increasingly concerned about the global economic outlook, analysts said.
US benchmark West Texas Intermediate (WTI) for November delivery fell 90 cents to a two-year low of $80.88 a barrel in late-morning trade. Brent crude for November retreated 43 cents to $83.35, levels last seen four years ago.
Both contracts have lost more than a fifth of their value since hitting 2014 highs in June.
Markets across Asia sank on Thursday, led by Tokyo, as a disappointing set of US data fanned worries that the effects of a slowdown in China, Europe and Japan are being felt in the world’s top economy.
Traders took their lead from New York and Europe, where stocks and the dollar sank.
“WTI and Brent continued to open in red,” Phillip Futures said in a market commentary. “With the current bearish conditions for crude oil, we expect this to continue,” it said.
A rebound in Asian trade Wednesday failed to gain traction as it was overwhelmed by negative sentiment in the face of waning demand in China, the world’s biggest energy consumer, and the eurozone.
Adding to the pain is a supply glut caused by strong US production of shale gas and a return of Libyan oil on to the market after facilities that were closed due to civil unrest resumed operations.
Members of the Organization of the Petroleum Exporting Countries (OPEC) are also maintaining output levels, while slashing prices to gain market share, analysts said.
Investors are awaiting the release later Thursday of weekly US crude inventories — a closely watched barometer of demand and supply in the world’s top oil consuming nation.
Phillip Futures said it expects prices for the US-centric WTI contract to remain supported at $80 for the rest of the day, but it was harder to plot a floor for Brent, which is more linked to the international market.