Crude oil just broke $32
Crude oil just broke $32 a barrel for the first time in 12 years.
West Texas Intermediate crude oil, the US benchmark, was down over 3% on Monday morning to as low as $31.90 a barrel, the lowest price since at least December 2003.
Brent crude, the international benchmark, was off over 4% on Monday to as low as $32.30 a barrel.
The slide comes as oil continues to get pounded to start the year and simply can't catch a bid.
The drop on Monday follows commentary from analysts at Morgan Stanley who in a note to clients said oil is now in "uncharted territory."
In its note Morgan Stanley said it expected the current collapse in energy prices wouldn't be as severe as what was seen in 1986. As it turns out, this crash in fact far worse and things aren't likely to turn around anytime soon, either.
Here's Morgan Stanley (emphasis ours):
A quick end does not appear to be in sight either: OPEC continues to produce "at will," Iran could increase exports in coming months if sanctions are eased, risk to exports from Libya are skewed to the upside, and the end of the export ban in the US makes elevated inventories in the Lower 48 available globally. Moreover, demand is likely to decelerate given the brittle outlook for economic growth, particularly in emerging markets, and our house view calls for continued dollar strength, which has weighed on oil prices throughout this downturn.
Of course the quick reaction is that this makes no sense for the kingdom with oil near multi-year lows, though on closer examination this move clearly indicates some anxiety from Saudi Arabia about the future of both oil and, as a result, its financial condition.