Oil’s rout deepest in 16 years

SINGAPORE (Reuters) – Oil prices have fallen as much as $16 from their peaks, their steepest reversal in 16 years, in a correction that traders say may be harder to shake off than past setbacks over the market’s four-year rally.

In real terms Brent has fallen $16.02 since it hit a high of $78.65 on August 8 — its biggest decline from peak to trough since prices fell just ahead of the first
Gulf War in late 1990. Brent is down more than 20 percent from its peak, meeting the technical criteria for the start of a bear market.

U.S. crude has dropped nearly $15 to hit a near six-month low of $63.53 a barrel on Wednesday, a fall only a hair smaller than those in August-November 2005 and October-December 2004. In those cases, oil recovered to make new highs within five and eight months, respectively.

In percentage terms there have been bigger stumbles on oil’s recent ascent, propelled steadily higher since 2002 by the war in
Iraq, soaring Chinese demand, constrained oilfield and refinery production, devastating U.S. Gulf Coast hurricanes, and most recently fears of a disruption to
Iran’s exports.

Reuters