Oil Stays Battered
(Bloomberg) -- Oil’s struggling to recover from its biggest three-day slump since 2016 as the specter of slowing global growth haunts investors who are already worried about a glut.
Futures were little changed in New York after tumbling 12 percent over the past three sessions. Fears over growth persisted as Chinese President Xi Jinping showed little signs of backing down in a trade dispute with the U.S. and the market braced for a Federal Reserve rate hike. Meanwhile, there are doubts over the effectiveness of output cuts pledged by the OPEC+ coalition at a time when American inventories are rising and Russia is pumping more.
“Commodities are not immune to concerns about the global economic outlook, and this is driving negative sentiment across all asset classes,” said Stephen Innes, the head of trading for Asia Pacific at Oanda Corp. in Singapore. “The toxic combination of oversupply worries and global growth distress should see oil prices languish into the year-end.”
Crude has collapsed almost 40 percent from a four-year high in early October, and is set for the worst quarterly decline since December 2014. After taking a battering over the past few sessions, U.S. oil is in oversold territory for the first time since Nov. 30. Skepticism that the Organization of Petroleum Exporting Countries and its allies won’t be able to trim a glut in the face of surging American shale production and stockpiles has kept a lid on prices.
West Texas Intermediate for January delivery, which expires Wednesday, was at $46.33 a barrel on the New York Mercantile Exchange, up 9 cents, at 7:34 a.m. in London. The contract closed 7.3 percent lower at $46.24 on Tuesday. Total volume traded was about 32 percent above the 100-day average. The more-active February contract added 8 cents to $46.68.
Brent for February settlement added 19 cents, or 0.3 percent, to $56.45 a barrel on London’s ICE Futures Europe exchange. Prices dropped 5.6 percent to $56.26 on Tuesday, the lowest close since October 2017. The global benchmark crude traded at a $9.78 premium to WTI for the same month.
The industry-funded American Petroleum Institute was said to report that U.S. crude inventories rose 3.45 million barrels last week, adding to fears of an oversupply after a government report on Monday said shale output is set to expand. At the same time, Russian Energy Minister Alexander Novak said the country’s oil production is rising, though it’s preparing to implement reductions to conform with an accord between OPEC and its allies.
While the U.S. and China -- the world’s two biggest economies -- are planning to hold meetings in January to negotiate a broader truce in their trade spat, a speech by Xi on Tuesday fueled concerns over slowing growth as he pushed back against critics abroad, such as American President Donald Trump, and did not outline new policies that would stimulate the economy.
In the U.S., investors are bracing for Wednesday’s Federal Reserve policy decision against the backdrop of a recent rout in global markets, which has put equities on course for the worst year since 2008. While an interest-rate increase is widely expected, it’s rare for the central bank to hike during such market turmoil.
To contact the reporter on this story: Heesu Lee in Seoul at hlee425@bloomberg.net To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Ovais Subhani
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- USA Driving Activity to Increase to All-Time Highs
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- I Squared Eyes Full Ownership of Europe Gas Storage Firm
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension