Oil drops the most since 2015 due to excessive supplies

West Texas Intermediate for December delivery settled its 7.1% drop to $ 55.69 a barrel on the New York Mercantile Exchange, its largest single-day drop since September 2015. Brent crude lost 65.6% to 65.47 dollars a barrel when entering a bear market. defined as a 20% drop from a recent high.

The fall in prices is a reversal from the beginning of this year, as Iran's sanctions would reduce global supply, pushing up oil prices. This quickly reversed last month as worries about declining demand in the face of increased production in Saudi Arabia, Russia and the United States led to lower crude prices.

This week, a report from the Organization of the Petroleum Exporting Countries on the increase in production and a tweet from President Trump have contributed to lower prices.

"The feeling has changed dramatically," said John Kilduff, founding partner of Again Capital. "We have simply reversed the offer with regard to almost a penny. It looks like a glut. "

The WTI fell to its lowest price of the year on Tuesday, after a monthly report highlighted that OPEC and Russian crude oil production continued to decline. Increase in October, offsetting more than the Iranian losses.

Crude oil production of OPEC members increased by 127,000 barrels a year in October, the oil cartel said Tuesday in its monthly report, averaging 32.9 million barrels a day. Russia's production has increased by 50,000 barrels a day, while in Iran it has decreased by 156,000 barrels a day.

After two weeks of daily decline, oil prices seemed to start picking up on Monday morning after the weekend announcement by a major producer, Saudi Arabia, to cut back on its exports to revive prices and avoid an overabundance of stocks.

Trump tweeted Monday: "Let's hope that Saudi Arabia and OPEC will not reduce oil production. Oil prices should be much lower depending on the supply! "

The comments surprised many badysts, who had said they suspected Trump would argue for a drop in oil prices after the end of the mid-term elections.

" Politics is still at stake. " Said Tyler Richey, co-editor of the Sevens Report. "President Trump's tweets aimed at the OPEC against cuts in production are another factor in the" bear "column."

Other factors also played a role, said Matt Smith, director of commodity research at ClipperData.

"You have also witnessed the strengthening of the dollar, which is weighing on oil prices, as well as a broader risk reduction scenario for commodities, while equity markets have pulled back past weeks, "said Smith," It's a sales cascade. "

Stronger dollar makes commodities more expensive for foreign buyers The WSJ Dollar Index, which tracks the dollar against to a basket of 16 other currencies, closed at its highest level since March 2017.

US Prices slipped 25% after peaking at $ 76.41 per barrel on October 3rd Prices had risen if it was expected that US sanctions against oil against Iran would create a tightening of supply as demand from Asian markets continued. to increase.

Of other great Oil producers, mainly the United States, Russia and Saudi Arabia, began to increase their production to offset the expected decline in Iranian exports.

But these events collided in early November with Washington's decision to soften sanctions on Iran and grant exemptions to some of Tehran's crude oil buyers, driving down crude prices and creating a loss. record.

In addition, there is growing evidence that demand for oil is beginning to weaken, with trade disputes between the US and China leading to lower growth expectations for the economy. 39, world economy.

Eugene McGillian, vice president of market research at Tradition Energy, said Eugene McGillian, vice president of market research,

The sluggishness of the oil market partly explains by Saudi Arabia's efforts for market are not enough, say JBC Energy badysts.

The kingdom said its exports would increase by 500,000 barrels a day less than the month of December. Saudi officials said the major producers should consider cutting their inventory by 1 million barrels a day in 2019.

Investors will watch two weekly reports on Wednesday and Thursday on US oil inventories, up sharply in recent weeks , contributing to the decline in oil prices.

– Neanda Salvaterra contributed to this article.

Corrections and Amplifications
The American Petroleum Institute publishes Wednesday weekly data on oil stocks. An earlier version of this article incorrectly declared the day as Tuesday. (November 13, 2018)

Write to Dan Molinski ([email protected]) and Amrith Ramkumar ([email protected]