US crude oil for delivery in October touched $39.86 per barrel before settling around $40.25 at 1:41 p.m. EST.
Oil prices continued their downward streak on Friday, dipping below $40 per barrel for the first time since 2009. US crude oil for delivery in October touched $39.86 before settling around $40.25 by 1:41 p.m. EST on Friday, according to Reuters. The dip below $40 marks a fresh six-and-a-half-year low for oil.
US firms added two more oil drilling rigs to their working fleet this week despite an ongoing glut in the space. Market watchers are becoming increasingly concerned that oversupply in the oil market may last longer than expected. “The market is stuck in a relentless downtrend,” Robin Bieber, a director at London brokerage PVM Oil Associates, told the news outlet. “The trend is down — stick with it.”
Fears over lower demand from major consumer China are weighing on oil prices as well. “The Chinese slowdown continues to dominate the oil market, causing persistent concerns over a serious decline of Chinese oil demand in the second half of the year,” Myrto Sokou, senior analyst at Sucden Financial, explained to The Wall Street Journal.
Analysts have said that the market needs to see a supply cut in the US in order for oil prices to see some support. “The bottom line is that the market remains oversupplied,” Michael Tran, director of global energy strategy at RBC Capital Markets, told the Journal. “Further signs of falling U.S. production is key before the market can rebalance.”
Oil prices have lost 27 percent year-to-date and 58 percent over the past year.
Securities Disclosure: I, Teresa Matich, hold no investment interest in any companies mentioned.