Oil Has Plunged More Than 40% Since 4-Year High in October

Oil in London dipped below $50 a barrel for the first time since July 2017 before recovering as the market turmoil and worries over U.S. supply countered signs the OPEC+ coalition may extend or deepen output cuts.

Futures fell as much as 1.1% on Wednesday on the first day of trading after Monday’s 6.2% drop. Russian Energy Minister Alexander Novak tried to reassure investors, saying the market will be more stable in the first half of 2019 due to the deal between OPEC and its allies to cut output, and that producers will react if the situation changes. Meanwhile, the S&P 500 Index is at the brink of sliding into a bear market.

Oil has plunged more than 40% from a four-year high in October on the prospect of a supply glut.

While the Organization of Petroleum Exporting Countries and its allies including Russia agreed to cut output early this month, investors are skeptical the reductions will be sufficient to dent growing supplies, especially from U.S. shale. At the same time, President Donald Trump’s trade war with China and the Federal Reserve’s policy on interest rates have clouded the global economic outlook.

“Bargain hunting” after the pre-Christmas sell-off and thin trading on Wednesday may have triggered the price increase on Wednesday, Emirates NBD commodities analyst Edward Bell said. “Once we get back into a more normal level of volumes trading, we’d expect the market to lock back onto looking for fundamental drivers which are pointing to a soft start for 2019.”

Brent for February settlement declined as much as 54 cents to $49.93 a barrel on the London-based ICE Futures Europe exchange, before paring losses to trade at $51.05 at 11:15 a.m. in London.