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The unprecedented decline in oil prices worsened as investors fled a market marked by increasing oversupply, a dim view of demand, and criticism of US President Donald Trump on Twitter. , the world's largest exporter of crude.
Futures plunged 7.1% in New York on Tuesday, the biggest single day decline in three years. The ominous forecast of OPEC for 2019 came at a time when US production and inventories were steadily increasing. Trump reprimanded Saudi Arabia for planning to cut production and lamented prices falling below $ 56 a barrel for the first time in a year.
Let's hope that Saudi Arabia and OPEC will not reduce their oil production. Oil prices should be much lower depending on the supply!
– Donald J. Trump (@realDonaldTrump) November 12, 2018
"This tweet has certainly not helped prices," said Warren Patterson, senior commodities strategist at ING Bank NV. "Given the growing global surplus over the first half of 2019, OPEC will likely attempt to ignore as much as possible the call of President Trump."
The West Texas Intermediate futures contract experienced a record 12-fold drop in fears that an oversupply of supplies similar to the 2014 price-killing surplus is recovering. In London, futures on Brent have declined in 11 of the last 12 sessions. The combined bullish positions of fund managers in WTI and Brent reached their lowest level in 14 months on Nov. 6, according to data from the Commodity Futures Trading Commission, while long positions fell and short positions declined. increases.
"Today's decision is only capitulation," said Nick Gentile, Managing Partner of Commodity Trading Advisor NickJen Capital Management & Consulting LLC in New York. "You get a combination of systematic ACTs, of the trend that follows guys, which adds to the shorts and global macro-men that wind up the long ones."
WTI for delivery in December dropped $ 4.24 to close the session at $ 55.69 a barrel on the New York Mercantile Exchange. The total volume traded on Tuesday was about 90% above the 100-day average.
Meeting of producers
A closely monitored meeting between the Organization of Petroleum Exporting Countries and its allies, including Russia on Sunday, resulted in no formal change in production policy, but delegates warned that they may need "new strategies". Saudi Arabia has also unveiled a plan to reduce its own shipments of about 500,000 barrels a day next month.
Oil chiefs from Venezuela and Oman have indicated that they could side with the kingdom on the issue of production cuts. Russian Energy Minister Alexander Novak has shown himself less favorable, saying Monday in a televised interview to Bloomberg: "We have to wait to see how the market is evolving".
"Russia's reluctance, yesterday and over the weekend, to unite to reduce a million barrels sent a negative signal to the market," said John Kilduff, a partner at Again Capital LLC. "On top of all that, there's a huge dollar force going on right now and in recent days."
The Bloomberg Dollar Spot index hit its highest level since May 2017 on Tuesday before falling back.
The Abu Dhabi meeting has reduced the chances of a production cut next month to "quite high", and this reduction could be around 1 million barrels a day, according to RBC Capital Markets.
In the United States, crude stocks stored at the Cushing, Oklahoma, mainline pipeline increased by about 2.5 million barrels last week, according to forecasts by Bloomberg.
Bloomberg.com
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