NEW YORK (Web Desk/APP) – The drop in US oil prices continued on Monday with the black liquid finishing below $40 a barrel, emboldening talk that lower prices could persist for longer, leading to much more carnage in the global oil patch.
Near 1800 GMT, US benchmark West Texas Intermediate for delivery in October was at $39.07 a barrel, down $1.38. The US benchmark contract last finished below $40 a barrel in February 2009.
The latest plunge in prices comes as growing worries about Chinese economic slowdown add to anxiety about excess supply.
“The mood is fairly depressed considering everyone is lowering the forecasts for next year and pushing out the recovery until 2017,” said Fred Lawrence, vice president of economics and international affairs at the Independent Petroleum Association of America.
Oil prices have been mostly in retreat for the last year, dropping from a peak of more than $100 a barrel in June 2014 to the mid-$40s in March, in part due to decisions by the Organisation of the Petroleum Exporting Countries to keep output high despite lower prices.
The latest drop, since early July, roughly coincides with a wave of volatility that hit the Chinese stock market and the July 14 nuclear agreement between Iran and world powers that will lift sanctions on Iran’s oil industry in exchange for stricter oversight of Iran’s nuclear industry.