A five-week rout for oil prices turned into a bear market Thursday for the U.S. crude benchmark, ending the longest bull run since 2015.
West Texas Intermediate crude for December delivery CLZ8, -1.62% on the New York Mercantile Exchange fell $1, or 1.7%, to settle at $60.67 a barrel, marking its ninth straight losing session and the lowest close since March. The close left the U.S. benchmark down 21% from its Oct. 3 peak, meeting a widely used definition of a bear market as a pullback of 20%.
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, -1.93% , 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 0.5% in 2018, according to FactSet, while Brent is still up 6.1%. Thursday’s close means that the bear market began after the bull-market peak on Oct. 3, ending a 324-day run that began on June 21, 2017, according to Dow Jones Market Data. The bull market was the longest since a 350-day run that ended on Jan. 28, 2015.
After falling into bear territory, oil won’t enter a bull market until it rises 20% from its bear-market low.