Energy just had its worst month in decades, and the bears are still in control.
Crude oil futures (@CL) dropped 7.2 percent yesterday, their biggest decline in over three weeks. Not only did they break under the psychologically key $50 level, @CL also closed at the lowest price since September 2017.
The issue continues to be tsunami of supply as demand slows. On Monday, the Energy Department predicted U.S. shale production will shoot to a new record before the end of 2018.
The Baker Hughes count of domestic oil rigs in operation has also stayed above 850. That reading, near high levels from early 2015, gives little reason to expect a slowdown in output.
Meanwhile, Russia pumped a record 11.42 million barrels per day in December.
The demand story has also shown cracks as economists scale back estimates for global growth. Goldman Sachs, J.P. Morgan and OECD cut their outlooks in November and Mario Draghi trimmed his view of Europe last week.
And then you have OPEC trimming its 2019 oil-consumption forecast for at least four straight months.
In conclusion, energy had a terrible November and there’s still no sign of relief in sight.