It has happened. U.S. oil prices dropped below $75 a barrel for the first time in more than three years amid continued pressure from over supply and soaring production.
Big oil companies, services companies and offshore drillers felt the pain as share prices fell in response. The Energy Select Sector SPDR ETF (XLE) fell 2.28% 0.35% to close at $85.60 as companies from Exxon Mobil (XOM) to Halliburton (HAL) to Diamond Offshore (DO) followed crude prices lower.
Light, sweet crude for December recently traded at $75.38, a 2.3% decline, after earlier falling as low as $74.93 a barrel, Brent, the global benchmark, traded down $1.98, or 2.46%, to $78.40 a barrel.
The Brent contract for January delivery fell $1.97, or to $79.15 a barrel.
Barron's predicted $75 oil earlier this year (see "Here Comes $75 Oil," March 29). The commodity has been in a downward slide for months as U.S. production has soared and global demand has waned. More recently, prices have been hurt by worries that OPEC would maintain its collective output target at its Nov. 27 meeting.
Even recent remarks by Saudi Arabia Oil Minister Ali al-Naimi dismissing talk of an oil price war among producers did nothing to stem the slide.
Among the U.S. majors, ConocoPhillips (COP) fell 1.6% to $70.03, followed by a 1.3% decline by Chevron (CVX) and Exxon's 1.15% fall.
Services companies and offshore drillers suffered sharper drops. Halliburton fell 2% to $51.60. Meanwhile, Transocean (RIG) fell 3.75% to $26.07, while Diamond Offshore and Seadrill (SDRL) each fell 3.5%. Noble (NBL) fell 2.86% to $53.63.
Last week, my colleague Ben Levisohn weighed in on the impact of falling oil prices on the offshore drillers. Read his post here.
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