(Bloomberg) -- Brent crude closed below $55 a barrel for the first time in more than a year as economic warning signs sent markets reeling across the globe.
Futures slid as much as 5.2 percent to the lowest since September 2017. Crude joined the turmoil that swept across global equities after the Federal Reserve hiked interest rates and President Donald Trump refused to sign a bill aimed at avoiding a government shutdown.
Oil’s on track for its worst quarterly loss in four years despite a pledge by OPEC, Russia and other allies to slash production. That’s been undermined by fears about surging U.S. shale supplies. Meanwhile, global investors remain concerned the Fed isn’t finished raising rates.
‘Disastrous Mistake’
Oil’s likely to fall further after the Fed’s “disastrous mistake," said Jay Hatfield, who manages $750 million in investments at Infrastructure Capital Management LLC in New York. “If the market’s crashing down, usually it’ll bring oil down too as people worry about growth."
Brent for February settlement fell $2.89 to $54.35 a barrel on London’s ICE (NYSE:ICE) Futures Europe exchange. The global benchmark crude traded at a $8.54 premium to West Texas Intermediate oil.
WTI for February delivery was down $2.29 to $45.88 a barrel on the New York Mercantile Exchange.
OPEC and its allies scrambled to boost confidence on Thursday, laying out more details about how major exporters plan to slash 1.2 million barrels in daily production. A day earlier, Saudi Energy Minister Khalid Al-Falih said the current price dip isn’t based on supply and demand of oil, but stems in part from factors including geopolitics, U.S. interest rates, the strength of the U.S. dollar and investor speculation.
Still, he added that OPEC will “need more time” for production curbs to balance the market.
“When I look around the world there’s plenty of crude oil out there," said Andy Lipow, president of Houston consultant Lipow Oil Associates LLC. “There’s more than adequate supplies of gasoline and with the start of new refining capacity in Asia, the crude oil surplus could simply be turned into a refined product surplus that continues to pressure prices."
The S&P 500 Energy Index slid as much as 3.3 percent, while the broader index fell as much as 2.6 percent. Drilling rig provider Helmerich & Payne (NYSE:HP) was the biggest decliner among energy stocks, plunging more than 7 percent.