Oil on course for worst week in year

Oil headed for its worst week in almost a year as the global risk-asset rout troubled investors already concerned over growing US supply.

Futures traded in New York are on track to post a 7.7 per cent slump this week as equities tumbled around the world. Adding to the alarm was data that showed US oil production at a new high, and key technical indicators pointing to a further retreat in prices. West Texas Intermediate earlier slumped close to $60 a barrel, all but erasing this year’s gain.

Oil’s weakness so far this month follows the best start to the year in over a decade. Yet fears that American shale production will outweigh efforts by the Organisation of Petroleum Exporting Countries to cut global inventories are back to the fore as data show US output now eclipses Saudi Arabia’s.

Another slump in US equity markets on Thursday highlighted a volatile trading week. “After the settlement yesterday, oil prices plunged with equities,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “We’re still trading around those levels, but need to wait and see what the US markets will do.”