Here we go again: Oil plunges back below $40

Crude oil prices plunged 4% on Monday, sliding to $39.86 a barrel Monday. It's the first time the price has been below $40 a barrel in nearly four months.

Oil prices are now down more than 22% since topping out above $51 a barrel in early June. That means the closely-watched commodity is officially back in a bear market.

It's the latest setback for oil bulls who thought crude was on a straight shot back to $60 and higher following the crash that began in late 2014. The price had peaked at $107 in June 2014.

The recent selling has been driven by a realization that the epic oil glut remains largely intact -- and some U.S. oil companies may make it worse by starting to drill more.

Not only is there an historic oversupply of crude, but gasoline inventories are now at record highs, despite the fact that it's summer driving season. The fear is that the backlog will force refiners to dial back their demand for oil, deepening crude stockpiles.

"Crude prices are charging lower to start the week as a plethora of bearish indicators emerge," Matt Smith, director of commodity research at ClipperData, wrote in a note.

http://money.cnn.com/2016/08/01/investing/oil-falls-below-40/index.html?iid=hp-toplead-dom

Last edited by Goose (8/02/2016 5:43 am)