Oil prices fall, massive sales offsetting supply concerns

SINGAPORE (Reuters) – Oil markets lost strength on Tuesday, as the deteriorating economic outlook and increased production in the United States offset the expected cuts in supply to the United States. oil exporting countries (OPEC).

The Brent crude futures contract, the international benchmark for oil prices, was $ 66.43 per barrel at 0608 GMT, down 36 cents (0.5%) from their last close.

WTI (West Texas Intermediate) futures in the United States stood at $ 56.97 per barrel, 23 cents, or 0.4%, lower than their latest settlement.

Declines followed price increases earlier in the session.

"The upside potential has proven fragile, as bullish movements are losing momentum," said Benjamin Lu of Singapore-based broker Phillip Futures.

Oil prices are nearly one quarter lower than their recent highs in early October, dampened by rising supply, particularly from the United States.

Crude oil production in the United States climbed nearly 25% this year to a record 11.7 million barrels a day.

This is because markets expect a general economic slowdown, which led to the fall of Asian stock markets on Tuesday, which compounded losses on Wall Street the day before.

As a result, forex traders are wary of oil markets and are seeing new downside risks to shale production growth in the United States and a deteriorating economic outlook.

The portfolio managers sold the equivalent of 553 million barrels of crude oil and fuels over the last seven weeks, the largest reduction since at least 2013 over a comparable period.

The funds now hold a net long position of just 547 million barrels, less than half of the recent record high of 1.1 billion at the end of September, and a drop from the record of 1.484 billion in January.

(GRAPHIC: drilling, production and storage of oil in the United States – tmsnrt.rs/2PBfE7z)

OPEC cuts expected

Concerned about an emerging production surplus similar to the one that caused prices to fall in 2014, OPEC calls for a reduction in supply of 1 million to 1.4 million bpd.

"We expect that OPEC will accept a reduction in the offer at its next official meeting on December 6," said French bank BNP Paribas.

The bank added that it expected Brent to recover at $ 80 a barrel by the end of the year.

"In 2019, we expect WTI to average $ 69 a barrel and Brent $ 76 a barrel," said BNP.

The International Energy Agency (IEA), which defends the interests of oil consumers, warned OPEC and other producers on Monday about the "negative consequences" of supply cuts, with many analysts fearing soaring crude prices does not affect consumption.