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- Oil prices dropped Tuesday after President Trump urged Saudi Arabia and OPEC not to cut oil production, even as traders fear the market is oversupplied.
- Brent, the global oil benchmark, was down 1.8% at $68.83 a barrel on London’s Intercontinental Exchange.
- West Texas Intermediate futures, the U.S. oil standard, were down 2.1%, at $58.68 a barrel on the New York Mercantile Exchange.
HIGHLIGHTS:
Brent crude hovered around the $70-per-barrel mark Monday supported by statements over the weekend from Saudi Arabia about the kingdom’s projected lower oil exports in December and the need for cooperation on a supply cut in 2019. But oil prices tumbled Tuesday after President Trump tweeted about not wanting OPEC to institute cuts.
The U.S. benchmark, which is experiencing it the longest losing streak on record since 1983, slipped further. As of Monday’s market close, WTI is about 22% lower from a peak of $76.41 per barrel reached Oct. 3.
The U.S. crude grade has continued to fall into bear market territory, driven by oversupply fears after Washington decided to soften its sanctions on Iran and grant waivers to some buyers of Tehran’s crude, just as other major producers were ramping up production.
INSIGHT:
Saudi Aramco’s oil field in Shaybah, Saudi Arabia.
Photo:
Simon Dawson/Bloomberg News
The gloom in the oil market is also because Saudi Arabia’s efforts to prop up the market aren’t enough, say analysts at JBC Energy. The kingdom said its exports would come in at 0.5 million barrels a day lower on-the-month in December.
Saudi officials said major producers should look at shaving off 1 million barrels a day of supply in 2019, but hesitant statements from Russia made traders nervous.
“Our total liquids balance for next year currently implies length of around 1.25 million barrels a day, so even adjusted for the 1 million barrels a day that OPEC is talking about we would still be left with some oversupply,” said JBC analysts.
AHEAD:
- The American Petroleum Institute, an industry group, releases weekly data Tuesday on U.S. oil inventories.
- The U.S. Energy Information Administration will publish an estimate of U.S. shale oil output Tuesday. “It is likely to reach a new record level in December and thus add to the oversupply. U.S. producers are not likely to have been best pleased by Trump’s tweet yesterday,” said analysts for Commerzbank in a note.#
—Dan Molinski contributed to this article.
Write to Neanda Salvaterra at [email protected]
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