Oil exceeds $ 60, but growth doubt for gains

LONDON (Reuters) – Oil surpassed 60 dollars a barrel on Monday, recovering some of the drop by nearly 7 percent from the previous session, although the uncertainty surrounding global economic growth has limited gains.

Brent crude futures, LCoC1, increased $ 1.84 to $ 60.64 per barrel at approximately 14:45 GMT, while the CLc1 futures contract rose from $ 1.47 to $ 51.89 per barrel. after Friday's sale, with both contracts reaching their lowest level in 13 months.

"It's hard to say if $ 60 is the new norm, because there does not seem to be any" normal "at the moment," said Jack Allardyce, oil and gas analyst at Cantor Fitzgerald.

"The recent weakness seems dramatic given the lack of real catalysts.It seems to have been motivated by a sense of impending doom in the midst of weak equities, geopolitics, declining demand and rising of supply, "he said.

The International Energy Agency predicts that global oil demand will exceed 100 million barrels per year in 2019, with a growth rate of 1.4 million barrels per day, but is falling by compared to its initial estimate of 1.5 million barrels per day.

A rising dollar that underestimated demand in major emerging countries, higher borrowing costs and the threat that the US-China trade dispute was threatening global growth pushed investors to exit assets more closely aligned with the global economy, such as stocks or shares. oil.

In November alone, hedge funds withdrew more than $ 12 billion from the oil market, thanks to a record drop in net long-term futures and options on Brent crude and the United States relative to the average price of oil and gas. oil for the month.

Even the prospect of an almost certain reduction in the output of the Organization of Petroleum Exporting Countries has not been sufficient to halt the slide.

"Oil prices are already in an exaggerated downturn. Indeed, it should be clear by the latest that OPEC will agree to a drastic reduction in production in early December, "said Commerzbank in a note.

Analysts at Fitch Solutions have said that even an expected reduction in supply led by the Organization of Petroleum Exporting Countries (OPEC) following an official meeting on Dec. 6 "might not enough to thwart bearish forces. "

The options market shows that investors in Brent crude, which is more closely tied to OPEC production, have increased their portfolio of contracts that give the owner the right, but not the obligation, to sell 10% futures oil futures below the current benchmark price. percent.

This compares to an increase of just 4.5% in holdings of options giving the owner the right to buy oil futures over the current price on a certain date.

Gross Brest 2019 Crude Options Accumulation: tmsnrt.rs/2RgxUQw

World balance of supply and demand of crude oil: tmsnrt.rs/2PKtzIy