A jolt lower for oil since peaking in October has set crude futures on track toward an ugly record. That is even after U.S. benchmark oil on Thursday fell into correction territory, defined as a drop of at least 20% from a recent peak.
If West Texas Intermediate crude for December delivery on the New York Mercantile Exchange CLZ8, -1.48% ends lower on Friday, it will mark its 10th consecutive decline and that would match the longest skid for the contract since a similar stretch from July 18-July 31 1984, according to Dow Jones Market Data.
Bespoke Investment Group pegs the losing stretch as the longest skid since at least 1983 (see chart below), noting that “there has never been a streak of more than 9 straight days where crude oil traded down on the day.”
What’s behind the downturn?
Rising production and a softening in U.S. oil sanctions on Iran, that included waivers for big crude importers like China, which helped to contribute to a whipsaw lower for oil prices. Indeed, just five weeks ago, oil futures had put in their highest prices in years. Lingering concerns about the global economy and expectations for sluggish corporate earnings in the future also have added to the downbeat mood in the oil industry.
That atmosphere has lent itself to a downdraft in stocks, with the Dow Jones Industrial Average DJIA, -0.93% the S&P 500 index SPX, -1.17% and the Nasdaq Composite Index COMP, -1.89% all trading lower Friday, and indexes in Europe, like the pan-European Stoxx Europe 600 Index SXXP, -0.37% and China’s Shanghai Composite Index SHCOMP, -1.39% also in the red.
Meanwhile, January Brent crude LCOF9, -1.27% also was in decline and flirting with its own tumble into