Oil prices continued their decline Friday, heading towards below $42.00 a barrel and hitting the lowest they’ve been since August. Asian stocks followed Wall Street down in early morning trading, as prices of commodities headed southward.
Western Texas Crude prices hit two-and-a-half-month lows, down 2.75 percent on Thursday after the U.S. government reported four times more stockpiles than market expectations while the global oversupply shows few signs of abating any time soon.
According to said John Kilduff, analyst and partner with Again Capital, "The realization of a mega-glut is finally registering within the market. I think we're probably in the midst of another leg lower here. It might not go straight down but we're on target to make new lows for the year."
Kilduff points to the poor economic data out of China all week as an indication that the economy there is slowing and there is an “expectation of renewed dollar strength, and even with the significant cut in rig count, you had another slight uptick in U.S. production."
Blame it on China
In fact, China is being blamed for the latest drop in all commodity prices, especially in copper and including gold. Gold tumbled to its lowest level since 2010 and copper fell to its weakest level in more than six years.
Oil futures are down more than 10 percent in the past month and dropped even further this week following the American Petroleum Institute report that showed an increase in U.S. supplies. The U.S. government reported Thursday that oil stockpiles rose by 4.2 million barrels last week due to higher imports. That was about four times what analysts had expected.