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The bear market in oil keeps getting worse as worries about global growth and a supply glut ratchet higher.

US oil prices plummeted 7% on Tuesday to settle at $46.24 a barrel. It was crude’s weakest close since August 2017.

The deepening downturn in the oil patch is yet more evidence of investors fleeing risky assets as they brace for an economic slowdown. The same growth jitters that are rocking Wall Street – the Dow and S&P 500 are on track for their worst December since 1931 – are infecting commodities. Small-cap stocks plunged into a bear market on Monday.

“Recessionary fears” have caused “contagion” in the oil markets, according to Bjornar Tonhaugen, head of oil market research at Rystad Energy.

That makes sense: Decelerating growth would eat into thirst for oil, which powers the global economy.

“Weaker” economic growth, especially in emerging markets, will likely hurt demand for crude, the International Energy Agency said in a report last week.

Fifty-three percent of fund managers expect the global economy to weaken over the next 12 months, according to a Bank of America Merrill Lynch survey released on Tuesday. That’s the dimmest outlook on growth since October 2008.

The growth scare couldn’t have come at a worse time for oil, which has plummeted 40% since hitting a four-year high of $76.90 a barrel on October 3.

“Crude prices are under pressure due to concerns about macroeconomic and oil demand growth,” said Mike Wittner, global head of oil research at Societe Generale.

Independent of economic concerns, oil traders have feared that the world is producing too much oil. The commodity plunged into a bear market last month because of concerns about a supply glut.

Saudi Arabia, Russia and the United States ramped up output after the Trump administration signaled a desire to wipe out Iran’s oil exports. But US officials later took a softer-than-expected approach toward Iran, granting waivers to China, India and other countries. That left the oil market with excess supply.

Doubts grow about OPEC deal

OPEC and Russia appeared to come to the rescue on December 7 with a deal to slash oil production by 1.2 million barrels a day starting in January. Yet doubts are growing about whether the agreement between OPEC and its allies goes far enough to mop up excess supplies.

“The cuts themselves are not sufficient to create a sustainable turning point in oil prices,” said Tonhaugen. “It’s just enough to stabilize (US oil prices) in the low-$50s.”

Although OPEC and non-OPEC pledged to reduce output by 1.2 million barrels per day, some analysts think actual cuts will be much smaller.

The combined cutback for the countries participating in the deal could be just 350,000 barrels, according to FGE, an oil and gas consulting firm. The analysts pointed to higher-than-expected production from non-OPEC countries, including Kazakhstan and Azerbaijan, and reluctance from OPEC nations like Iraq.

“The absolute level of output from January will still be too high to absorb the stock surplus in the next few months,” FGE wrote in a report last week.

The firm has a “bearish bias” on oil prices, calling for Brent to trade at $55 to $60 a barrel through the first quarter of 2019. Brent declined 5% to $57.35 a barrel on Tuesday.

On the other hand, Societe Generale’s Wittner expects oil prices to stabilize and eventually move higher – but warned it could take months for a recovery to form.

Wittner said bets by hedge funds and traders are “very bearish,” but that “will not last forever.”

US shale keeps surging

Oil traders continue to fret about the enormous amount of crude getting pumped in the United States thanks to the shale revolution. The Permian Basin of West Texas has emerged as one of the world’s most prolific oilfields.

“Relentless growth” in the United States has lifted output by 1.1 million barrels per day since May, when sanctions on Iran were announced, according to the IEA.

Rystad Energy expects US output to surge by nearly 2 million barrels per day in 2019, with most of the growth coming in the second half of the year. That’s when new pipelines are expected to come online, unlocking bottlenecks caused by the Permian Basin’s blockbuster growth.

All of that US shale could be arriving just as the global economy slows down.