(Bloomberg) -- Crude tumbled the most in five months in London as price volatility climbed to a seven-year high and Goldman Sachs Group Inc. warned of wider swings to come.
Brent futures fell 7.8 percent as global equities neared a bear market. Volatility is set to “spike” as prices seek an equilibrium, which could drag oil below $20 a barrel, Goldman Sachs said. The CBOE Crude Oil Volatility Index, which measures expectations of price swings, rose as high as 73.52, almost the highest since 2009. The world oil surplus will be bigger in the first half of this year than previously estimated, according to the International Energy Agency.
"The IEA data shifted attention back to the global glut," said John Kilduff, a partner at Again Capital LLC, a New York- based hedge fund that focuses on energy. "It dashed any hopes of supply and demand coming into balance anytime soon."
Oil is down about 25 percent in New York this year on speculation a global glut will persist amid the outlook for increased exports from Iran after the removal of sanctions and brimming U.S. crude supplies. Futures dropped to a 12-year low of $26.19 in January. U.S. crude inventories rose above 500 million barrels to the highest since 1930 in the week ended Jan. 29.
Brent for April settlement dropped $2.56 to $30.32 a barrel on the London-based ICE Futures Europe exchange. It was the biggest decline since Sept. 1. The European benchmark crude closed at a 58-cent premium to West Texas Intermediate oil for April delivery.
WTI for March delivery slipped $1.75 to settle at $27.94 a barrel on the New York Mercantile Exchange. It was the lowest close since Jan. 20. Total volume traded was 58 percent higher than the 100-day average.
The MSCI All-Country World Index was 18 percent lower from a May record, while the Standard & Poor’s 500 Index touched a 22-month low on doubts about the strength of the worldwide economy, before rebounding by less than 1 percent in the afternoon.
View Full Article
Copyright 2016 Bloomberg News.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you