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United States crude oil inventories drop slightly last week: API

21 November, 2018, 15:04 | Author: Kristi Dunn
  • Oil falls after Russia preaches patience rather than production cuts

International Brent crude oil futures were at $63.39 per barrel this morning, up $86 per barrel, or 1.4%, from their last close.

West Texas Intermediate ended Tuesday's session down $3.77, or 6.6 percent, at $53.43 per barrel, while Brent fell $4.26, or 6.4 percent, to settle at $62.53 per barrel.

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

"The WTI crude market will spend the first half of today's trade "testing" recent lows".

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

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.

The S&P 500 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.

Global stock markets have suffered a shakeout in the past two months, pressured by worries of a peak in corporate earnings growth, rising borrowing costs, slowing global economic momentum and worldwide trade tensions.

"OPEC continues to discuss a reduction of oil production to halt falling prices, but Russian Federation didn't seem too supports the idea that increases the responsibility of Saudi Arabia for any coordinated action", said analyst commodity sector Schneider Electric Robbie Fraser.

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Amid the uncertainty, financial traders have become wary of oil markets, seeing further downside risk to prices from the growth in United States shale production as well as the deteriorating economic outlook.

According to Credit Suisse, prior to oil's selloff in early October, macro/discretionary funds and CTAs held a net long position that ranked in the top decile over the past five years.

Trump said he won't let the murder of US-based journalist Jamal Khashoggi jeopardize relations with the Saudis as oil prices may "go through the roof" if the relationship between the two nations breaks. "It really is a too-big-to-fail relationship", said Joe McMonigle, senior energy policy analyst at Hedgeye Risk Management in Washington.

"Rising US crude inventories are also weighing heavily on sentiment, with expectations of a further build (of over 2 million barrels) this week".

Concerned about an emerging production overhang similar to the one that led to a price slump in 2014, the Organization of the Petroleum Exporting Countries (OPEC) is pushing for a supply cut of 1 million to 1.4 million bpd.

The Organization of the Petroleum Exporting Countries is pushing for a supply cut of 1 million bpd to 1.4 million bpd when it meets on December 6.

Portfolio managers have sold the equivalent of 553 million barrels of crude and fuels in the last seven weeks, the largest reduction over a comparable period since at least 2013.

Russia's energy minister Alexaner Novak has reportedly remarked that the oil market alliance will monitor supply and demand in the coming weeks before deciding on production levels.

"The global economy is still going through a very hard time and is very fragile", IEA chief Fatih Birol said on Tuesday.

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