Crude oil just had its worst month in two years

October wasn’t just a tough month for equities, it was also a crushing month for crude oil.

After hitting four-year highs at the beginning of October, WTI crude oil futures (CL=F) fell 14% from those highs and had their worst monthly performance since July of 2016.

Increases in global supply, as well as trade war tensions between the US and China, sent oil plunging earlier in the week.

“Crude has been hit hard by the broader macro sell-off and concerns about trade wars and strong dollar hurting emerging market (EM) demand. There has also been a lot of market speculation about the White House granting waivers to allow countries to continue to import Iranian barrels when sanctions snapback on November 4,” Helima Croft, RBC’s global head of commodity strategy, told Yahoo Finance.

RELATED: Take a look at the New York Stock Exchange before Trump's election:

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New York Stock Exchange before the election
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New York Stock Exchange before the election
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 3, 2016. REUTERS/Brendan McDermid
Pedestrians walk along Wall Street near the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Oct. 31, 2016. U.S. stocks rose from a six-week low amid an increase in deal activity as traders assessed the outlook for the presidential election and interest rates in the world's largest economy. Photographer: Michael Nagle/Bloomberg via Getty Images
NEW YORK, NY - NOVEMBER 01: Traders work on the floor of the New York Stock Exchange (NYSE) on November 1, 2016 in New York City. As Wall Street continues to feel election uncertainty, the Dow Jones closes fell more than 100 points. (Photo by Spencer Platt/Getty Images)
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Nov. 4, 2016. U.S. stocks fluctuated amid payrolls data that bolstered speculation the economy is strong enough to weather higher interest rates, while investors remained wary before the looming presidential election. Photographer: Michael Nagle/Bloomberg via Getty Images
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Nov. 4, 2016. U.S. stocks fluctuated amid payrolls data that bolstered speculation the economy is strong enough to weather higher interest rates, while investors remained wary before the looming presidential election. Photographer: Michael Nagle/Bloomberg via Getty Images
NEW YORK, NY - NOVEMBER 01: Traders work on the floor of the New York Stock Exchange (NYSE) on November 1, 2016 in New York City. As Wall Street continues to feel election uncertainty, the Dow Jones closes fell more than 100 points. (Photo by Spencer Platt/Getty Images)
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Oct. 31, 2016. U.S. stocks rose from a six-week low amid an increase in deal activity as traders assessed the outlook for the presidential election and interest rates in the world's largest economy. Photographer: Michael Nagle/Bloomberg via Getty Images
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Iranian sanctions kick in

US sanctions on Iran’s crude oil exports take effect November 4 and have been part of a bullish argument for crude prices as they would further tighten supply.

“We actually believe that the White House is going to be quite stringent in granting significant reduction exemptions and that around 1.6 million barrels of Iranian exports will be off the market by Q1 2019, and that will lead to tighter supply and demand dynamics,” according to Croft.

New data released on Wednesday from the US Energy Information Administration showed a drop in U.S. fuel stockpiles, as crude oil inventories rose.

Total gasoline inventories decreased by 3.2 million barrels during the week ending October 26, and US crude oil inventories rose by 3.2 million barrels, according to the EIA’s weekly report. The offset between the fuel stockpiles and inventories pushed crude oil briefly higher during Wednesday’s trading session.

“Right now, from a crude oil perspective, the market is well supplied. I think that the narrative over the last two months has changed. The market at the end of the summer through September was overly focused on the supply situation, or lack of supply, but that narrative has changed. Now more of the focus is on demand,” Stephen Schork, founder and editor of the Schork Report, told Yahoo Finance.

Schork thinks that the crude oil prices are currently at a key level of support. “We are in a critical area of support at the $65 level. This is where the market bottomed in August, in June and back in the spring. In the short to medium term, I think we sought out a bottom. I see a potential rebound back above $70 a barrel as demand picks up but not much higher than the mid 70s,” Schork explained.

Heidi Chung is a reporter for Yahoo Finance. Follow her on Twitter: @heidi_chung. 

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