Rampant expectations for a global oil supply glut sent the U.S. benchmark to its lowest finish of the year.
December West Texas Intermediate crude CLZ8, +0.56% dropped $4.24, or 7.1%, to settle at $55.69 a barrel on the New York Mercantile Exchange on Tuesday, marking a historic 12th straight decline, deepening a descent into a bear market, defined as a drop of at least 20% from a recent peak.
Here are some of the key reasons that oil prices have staged a gut-wrenching drop, after posting a 52-week high back on Oct. 3:
- Oversupply: The Organization of the Petroleum Exporting Countries raised its production in September by 100,000 barrels a day to 32.78 million barrels of oil a day—a one-year high, according to the International Energy Agency.
- A surprise: Trump granted waivers to eight countries, allowing them to temporarily continue buying Iranian oil despite U.S. sanctions on the country’s energy sector which took effect Nov. 4.
- Seasonality: A time of planned shutdowns at major crude-oil refineries for maintenance, is more active than normal, resulting in more crude in inventories amid a period that was already expected to see slowing demand
- Trump: President Donald Trump has been consistently advocating for lower oil prices and on Monday issued a tweet urging for even lower prices
- U.S. oil: U.S. production climbed to a record 11.6 million barrels a day for the week ended Nov. 2, adding to oversupply worries.