US international oil prices continued to decline Tuesday. Due to oversupply and concerns about weakening demand, the market was struck by a sharp decline in three years and a steep decline for the 12th consecutive day.
In New York Mercantile Exchange (NYMEX), West Texas Intermediate (U $) for December delivery fell 7.1 percent to $ 55.69 a barrel. Brent crude was down 6.6 per cent to $ 65.47 a barrel. 20% decline from recent peak.
The price collapse will be reversed earlier this year when Iranian sanctions on Iran are expected to reduce global supplies and raise oil prices. Crude oil prices fell as concerns over demand declined as output increased from Saudi Arabia, Russia and the United States.
According to the Organization of Petroleum Exporting Countries (OECD) report this week, high-powered products and Tweets from Trump served as price-down momentum.
"There was a sea change in emotion again," said Capital's founding partner, John Kilduff. "We did not put a penny on the supply side, it looks like a glut situation."
Simon Dawson / Bloomberg Communications
The WTI fell to its lowest price on Tuesday, as crude oil production in OPEC and Russia continued to rise in October, offsetting losses from Iran in its monthly report.
OPEC member crude oil production rose an average of 127,000 barrels a day in October, reaching an average of 32.9 million barrels a day, the cartel said on Monday. Russia 's output has increased by 50,000 barrels a day, while Iran' s output has decreased by 150,000 barrels a day.
After Saudi Arabia's major producers announced the weekend, oil prices seem to have started to recover after a two-week fall. This means that Saudi Arabia will reduce exports to raise prices and avoid oversupply.
However, Trump said on Monday that "Saudi Arabia and OPEC do not want to reduce their oil production." Oil prices should be much lower based on supply! "
This comment surprised many analysts who suspected that Trump's coercion on oil prices would end after the midterm elections.
"Politics is still active," said Tyler Richey, co-editor of Sevens Report. "President Trump's tweet against OPEC's cutbacks in production is another count of the" bear "column.
Other factors also played an important role, said Matt Smith, director of product research at ClipperData.
"In recent weeks, the stock market has fallen and we have seen a stronger dollar-weighted dollar and a wider risk-off scenario for commodities," he said.
The stronger the dollar, the more expensive it is for foreign buyers. The WSJ dollar index tracks the dollar against 16 other currency baskets and closed at Monday 's highest level since March 2017.
US prices were down 25 percent from a record high of US $ 76.41 a barrel on October 3. US oil sanctions against Iran, its main producer, are expected to cause supply pressure as demand in markets such as Asia continues to grow.
Other top oil producers, mainly the US, Russia and Saudi Arabia, started to increase their output to offset Iran's reduced export expectations.
But such developments collided with Washington 's decision to weaken sanctions against Iran in early November and to reduce record losses to some buyers of crude oil prices in Tehran.
In addition, there are increasing signs that oil demand is beginning to weaken as trade disputes between the United States and China downgrade the global economic growth outlook.
Eugene McGillian, vice president of market research for Tradition Energy, said, "Basically we anticipate a shortage of supplies six weeks ago and now we are looking for excess supply. Demand is declining.
Saudi Arabia's market intervention is not enough, so the darkness in the oil market is partly caused by analysts at JBC Energy.
The kingdom said exports will fall to 500,000 barrels a day in December. Saudi officials say major producers will cut their supply by one million barrels a day by 2019.
Investors will see weekly reports on weekends and Thursdays, and will see a list of US oil inventories that have risen sharply in recent weeks and have contributed to lower oil prices.
-Neanda Salvaterra contributed to this article.
Calibration and amplification
The American Petroleum Institute released its weekly petroleum inventory survey on Wednesday. Earlier versions of this article incorrectly stated Tuesday. (November 13, 2018)
Write to Dan Molinski [email protected], Amrith Ramkumar ([email protected])