Oil Sinks To Four-Year Low Below $83 As Economic Worries Mount

Oil fell more than $1 a barrel on Thursday to a four-year low below $83 a barrel as growing concerns over the global economy stretched a four-month rout.

Global benchmark Brent has lost more than 28 per cent since June on slow demand and abundant supply. Losses have accelerated in October on signals that the Organization of the Petroleum Exporting Countries has no plan to cut output.

Brent crude for November delivery had dropped to $82.72 a barrel, the lowest since November 2010 and was down 84 cents at $82.94 a barrel by 1102 GMT. U.S. crude fell $1.47 to $80.31 a barrel.

“The market still seems very bearish,” said Eugen Weinberg, analyst at Commerbank in Frankfurt. “And despite us seeing a floor around $80, even this floor might come into danger if we don’t have any signal from OPEC any time soon.”

Assets which depend on economic growth, such as shares and oil, have been hit by a raft of weak indicators from Europe at a time when other big economies, including China, Japan and Brazil face their own hardships.

At the same time, the U.S. Federal Reserve is set to wind down later this month the asset purchase programme that has boosted markets over the past two years.

Brent has fallen from a high of $115.71 reached in June – a level reached on concern that Islamic State’s insurgency into Iraq would disrupt its supplies – and well below the $100-mark until recently seen as a level OPEC members would defend.

Global economic worries deepened this week after China’s consumer inflation fell to near five-year lows and U.S. producer prices declined for the first time in more than a year. The International Energy Agency also cut its global oil demand growth forecast for 2015.

Some analysts tempered the price drop with caution.

“The last time prices were this low, the global economy was in the midst of the great recession, and demand for oil is certainly much stronger now,” Thomas Pugh, an analyst at Capital Economics, told Reuters Global Oil Forum.

“We are really in a hyped downward spiral, where any bear item is overly emphasised,” analysts at JBC Energy said in a report.

Venezuela has called for an emergency meeting of OPEC – ahead of its next scheduled gathering on Nov. 27. OPEC has yet to respond officially to the request, athough OPEC sources have said such a meeting is unlikely.

Reports of ample supplies in the United States added downward pressure on prices. According to industry group the American Petroleum Institute, U.S. crude inventories rose 10.2 million barrels to 370.7 million barrels.

Traders will be looking to the government’s weekly supply report due at 1500 GMT on Thursday for confirmation of the increase, which was higher than analysts’ expectations for a build of 2.8 million barrels.