Oil struggles to recover after falling 7%, feeling weak

Oil markets struggled to find their marks on Wednesday after plunging 7% from the previous session, with supply up and the specter of a drop in demand to keep investors on the edge.

The US West Texas Intermediate (WTI) crude oil futures price is $ 55.54 per barrel at 0159 GMT, down 15 cents from their latest settlement.

The international benchmark on Brent crude oil futures rose 4 cents to 65.51 dollars a barrel.

Markets fell more than 7% the day before. Crude oil has lost more than a quarter of its value since early October, which has become one of the largest declines since the collapse of prices in 2014.

Falling spot prices completely reversed the crude oil futures curve.

Spot prices in September were significantly higher than those for later deliveries, a structure known as backwardation that involves a tense market because it is not worthwhile to store oil.

By mid-November, the curve had shifted into contango, when crude prices for immediate delivery were cheaper than those for later shipment. This implies a saturated market, because it is interesting to store oil for resale later.

Oil markets are under pressure from two sides: an increase in supply and growing concerns about the economic downturn.

US production of crude oil from its seven major shale basins is expected to hit a record 7.94 million barrels per day (b / d) in December, the US Department of Energy's Energy Information Administration (EIA) said Tuesday. 39; Energy.

This rise in onshore production contributed to overall US crude oil production reached a record 11.6 million barrels per day, making the United States the world's largest oil producer, ahead of Russia and Saudi Arabia.

Most badysts expect US production to exceed 12 million bpd. in the first half of 2019.

"We think it would cap any surplus at $ 85 a barrel," said Jon Anderson, head of commodities at Vontobel Asset Management.

The increase in production in the United States contributes to the increase in inventories.

US crude inventories rose 7.8 million barrels during the week ending Nov. 2, to reach 432 million euros as refineries reduced production, data from the group said on Tuesday. Industrial American Petroleum Institute.

The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) has watched with alarm the soaring drop in supply and prices.

OPEC has stated more and more publicly that it will start retaining crude from 2019 to tighten inventory and drive up prices.

"The OPEC and Russia are under pressure to reduce current production levels, a decision that should be made at the next OPEC meeting on December 6," Andersson said.

This puts OPEC on a collision course with US President Donald Trump, who publicly supports low oil prices and has asked OPEC not to cut production.