Oil slid by the most in two weeks, falling from overbought territory amid concerns around global economic growth. 

Futures in New York fell 1.1 per cent on Thursday after holding at the highest since 2014 this week. Technical indicators have signaled oil has been due for a pullback since earlier this month. Meanwhile, the resurgence of lockdowns in Eastern Europe and Russia due to rising coronavirus cases are threatening the global economic recovery that has buoyed commodities and energy markets.

The possibility of a winter with economic lockdowns worldwide complicates the bullish economic outlook, said Ed Moya, senior market analyst at Oanda Corp. “There’s been a little bit of loss of momentum and that’s the real pain of the global economy.”

Oil has held at highest levels since 2014 with supplies depleting as coal and natural gas shortages drive greater crude consumption. Saudi Arabia said any extra oil from OPEC+ would do little to tame the surging cost of gas, predicting demand may rise as much as 600,000 barrels a day if the northern hemisphere’s winter is colder than normal.

The oil market is tightening but neither additional supply from OPEC+ nor a U.S. Strategic Petroleum Reserve release will meet the growing demand for sweet grades, Energy Aspects Ltd. said in a note this week.

West Texas Intermediate crude’s 14-day Relative Strength Index has been above 70 since early October, signaling the commodity is overbought. 

Prices

• West Texas Intermediate for December delivery fell 92 cents to settle at US$82.50 a barrel in New York
• Brent for December settlement dropped US$1.21 to settle at US$84.61 a barrel

Despite Thursday’s price decline, the structure of the U.S. crude market is holding up as stockpiles continue to drain at the key storage hub of Cushing, Oklahoma. Nearby West Texas Intermediate crude spreads surged to a three-year high, and the closely-watched spread between the nearest December contracts is at the strongest since 2013. 

Other market news:

• Surging prices for natural gas are threatening to eat up the profit some oil refiners are making on their fuels, forcing them to cut processing rates and even altering normal crude-buying patterns.
• India will empty half of its Mangalore oil reserves by December, according to the Chief Executive of Indian Strategic Petroleum Reserves Ltd.
• A unit of Exxon Mobil Corp. has temporarily shut in production in Chad after its facilities were attacked over ongoing talks to sell the business to London-based Savannah Energy.