Crude Drops 7% as Oil Markets Face "Unprecedented" Uncertainty

21 November, 2018, 15:14 | Author: Kevin Carter
  • Oil falls after Russia preaches patience rather than production cuts

Yet the bounce did little to reverse overall market weakness, which saw crude tumble by more than 6%the previous session amid a selloff in global stock markets.

The West Texas Intermediate for January delivery slumped 3.33 USA dollars to settle at 53.43 dollars a barrel on the New York Mercantile Exchange, while Brent crude for January delivery plunged 4.26 dollars to close at 62.53 dollars a barrel on the London ICE Futures Exchange. The contract fell as much as 6.2 percent earlier in the session to $53.63 a barrel, the lowest since October 2017. The worldwide benchmark fell as much as 7.6 per cent to $61.71, the lowest since December 2017.

Oil's slide has been largely unimpeded since early October when WTI prices were near four-year peaks.

"For the time being it's more about risk", said Jim Ritterbusch, president of Ritterbusch and Associates.

The S&P 500 index hit a three-week low on Tuesday as weak results and forecasts from big retailers fanned worries about holiday season sales, while tech stocks continued to slide on concerns about iPhone sales.

The S&P energy sector (XLE -2.6%) supplants tech as the stock market's worst performer, as US crude oil futures sink to fresh one-year lows, falling alongside stocks as investors dump risk assets; WTI -5% at $54.35/bbl, Brent -5.1% at $63.38/bbl.

Oil prices are around a quarter below their recent peaks in early October, weighed down by surging supply, especially from the United States, as well as a slowdown in global trade.

More news: Macron - Trump: "France is not a vassal and ally"

Further dragging on the oil outlook, OPEC and other forecasters have signaled that the global oil market could produce a surplus in 2019 on slowing demand, despite a dip in Iranian oil exports after USA sanctions recently went into effect. Meanwhile, US President Donald Trump said Saudi Arabia has been "very responsive" to his requests to keep prices low, calling into question Opec's resolve to trim supply.

Wednesday's rebound came after a report by the American Petroleum Institute late on Tuesday that U.S. commercial crude inventories last week fell unexpectedly by 1.5 million barrels, to 439.2 million, in the week to November 16.

Industry group the American Petroleum Institute is scheduled to release its data at 4:30 p.m. EST, followed by government data on Wednesday morning.

OPEC, Russia and other non-OPEC producers are considering a supply cut of between 1 million barrels per day (bpd) and 1.4 million bpd at a December 6 meeting, sources familiar with the issue have said.

Russian Energy Minister Alexander Novak said Monday that the country and its allies in OPEC need to watch the oil market in the coming weeks before making any decisions to reduce output.

"The name of the game in the oil market is volatility", International Energy Agency Executive Director Fatih Birol said at a conference in Oslo.

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