NEW YORK (AP) — Oil prices are continuing to slide on fears of a slowdown in the world economy, with U.S. crude on pace to close at under $40 a barrel for the first time since the days of the global economic crisis.
Already trading around six-year lows on a prolonged slump, U.S. crude fell $1.48, or 3.7%, to $38.97 per barrel Monday afternoon. Earlier it dropped to $37.75. Oil hadn’t closed below $40 a barrel since February 2009, although it briefly traded below that level on Friday.
Brent crude, a benchmark for international oils used by many U.S. refineries, fell $2.10, or 4.6%, to $43.36 and is at its lowest levels since March 2009.
Investors are getting more and more concerned about the health of the world economy on signs that growth in China, the second-largest economy in the world, is slowing down. That led to a sell-off in stocks Friday and another on Monday, when China’s main stock market took its biggest dive in eight years.
The U.S. has ramped up oil production to historic levels over the last few years while OPEC countries continued to churn out crude. Supplies have built up and growth in the world economy has been slow, with China’s economy losing steam and Japan’s shrinking. That resulted in a supply glut that has punished oil prices over the last year. The price of U.S. crude has fallen more than 60% from its 2014 highs.
U.S. crude averaged more than $90 a barrel from 2011 through 2014. Its price has fallen for eight straight weeks, the longest slump in almost 30 years.