A five-week rout for oil prices was threatening Thursday to end the U.S. crude benchmark’s longest bull market since early 2015.
West Texas Intermediate crude for December delivery CLZ8, -1.17% on the New York Mercantile Exchange was down 77 cents, or 1.2%, at $60.90 a barrel after trading as low as $60.56, on track for its ninth straight losing session. A close below $61.13 a barrel for the front-month contract would leave WTI down 20% from its Oct. 3 high, according to Dow Jones Market Data, meeting a widely used definition of a bear market.
October marked a turnabout in the crude-oil market, which had rallied sharply in 2018, with gains fueled in part by fears that the Trump administration’s renewal of sanctions against Iran, bottlenecks in U.S. shale oil producing regions and strong U.S. economic growth would tighten the oil market. WTI hit a nearly four-year high above $76 a barrel on Oct. 3, while Brent crude LCOF9, -1.35% , the global benchmark, topped $86 a barrel. Brent is off more than 18% from its recent high.
Signs that the Organization of the Petroleum Exporting Countries, or OPEC, led by Saudi Arabia, and its allies, particularly Russia, had boosted production in anticipation of the sanctions. Earlier this month, the Trump administration granted waivers to eight countries, including some of the biggest buyers of Iranian crude, to allow them to temporarily continue imports.
WTI is clinging to a gain for the year, up 0.9% in 2018, according to FactSet, while Brent is still up 6.1%. According to the way bear markets are calculated, a close below $61.13 for WTI on Thursday would mean that the bear market began on Oct. 3 at the bull-market peak, ending a 324-day run that began on June 21, 2017, according to Dow Jones Market Data. That would make it the longest bull market since a 350-day bull market that ended on Jan. 28, 2015.
If oil falls into bear territory, it would not re-enter a bull market until it rises 20% from its bear-market low.