WTI rebounds 1%, settling at $56.25 after record 12-day losing streak

Ivan Schwartz
November 15, 2018

The latest falls came after oil cartel Opec reduced its forecast for global oil demand next year.

"Crude oil futures succumbed to overwhelmingly bearish pressure amidst ... weaker market fundamentals", said Benjamin Lu, analyst at brokerage Phillip Futures in Singapore. OPEC and its partners, meanwhile, are said to be considering a bigger-than-anticipated cut in production.

Fearing a renewed glut like in 2014, when prices crashed under the weight of oversupply, the Organization of the Petroleum Exporting Countries (OPEC) is discussing supply cuts.

Oil prices have dropped steeply from a four-year high above $86 a barrel in October, pressured by concern that global demand is weakening amid adequate supply, offsetting US sanctions on Iran that have started to cut the OPEC country's oil exports.

But when President Donald Trump imposed sanctions November 5, he issued six-month waivers for some of Iran's biggest oil customers. America's increasing inventories suggests "the nation's crude exports could become more active, resulting in excess global supplies".

Futures for West Texas Intermediate fell 7.1 percent to $55.69 a barrel on the New York Mercantile Exchange. Total volume traded on Thursday was about 23% higher than the 100-day average. The contract fell 26 cents to $59.93 on Monday, the lowest close since February 13.

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Oil prices have plunged more than $20 a barrel since the start of October, when Brent crude rose to almost $87 a barrel and U.S. benchmark West Texas Intermediate (WTI) traded around $77. The global benchmark crude was at a $9.88 premium to WTI for the same month.

Even as the Saudis have promised to reduce output, USA production reached 11.6 million bpd in the most recent week, a new record.

US crude output from its seven major shale basins was expected to hit a record 7.94 million bpd in December, the US Energy Information Administration (EIA) said on Tuesday. That eased fears that new U.S. sanctions on Iran would cause shortages and drive prices higher.

Once the oil industry's star product, gasoline is now losing oil refineries money in Europe and has plunged in value against diesel, its main competitor.

That surge in onshore output has helped overall USA crude production hit a record 11.6 million bpd, making the United States the world's biggest oil producer ahead of Russian Federation and Saudi Arabia.

Riyadh indicated on Monday it was on course to ignore the United States president's wishes at OPEC's next meeting due in December because it saw a need to reduce OPEC output by a collective one million barrels per day during 2019. Analysts predict a rise of 3.2 million barrels, according to a Bloomberg survey.

Other reports by GizPress

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