(Bloomberg) -- Oil headed for the longest run of weekly declines in almost three decades on signs the supply glut that drove prices to a six-year low will be prolonged.
The nation’s stockpiles are almost 100 million barrels above the five-year seasonal average, according to weekly government data. Crude also retreated on concern a slowdown in China’s economic growth will reduce demand.
Oil has slumped more than 30 percent since this year’s closing peak in June amid speculation the global surplus will persist. Leading members of the Organization of Petroleum Exporting Countries are maintaining output, while Citigroup Inc. predicts crude may slide to as low as $32 a barrel, a level last seen during the global financial crisis.
“Obviously concerns about the global economy are really pulling this market down,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “It’s a demand story as much as a supply one. The $40 level is a very important psychological area.”
West Texas Intermediate for October delivery dropped 93 cents to $40.39 a barrel on the New York Mercantile Exchange at 10:40 a.m. The volume of all futures traded was about 5 percent above the 100-day average. The September contract expired Thursday after rising 34 cents to $41.14.
WTI for delivery in December 2016 traded $6.23 above December 2015. The premium was as high as $7.50 on Aug. 17.
“It could be the result of producers hedging, pressuring the back end of the curve more than front,” said Michael Hiley, head of over-the-counter energy trading at New York-based LPS Partners Inc., a futures brokerage.
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Copyright 2016 Bloomberg News.
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