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For the week, Brent fell 11.3% and WTI, by 10.8%, the biggest drop of a week since January 2016
For the week, Brent fell 11.3% and WTI, 10.8%, the largest drop of a week since January 2016.
PHOTO: FILE
BOSTON: Oil prices fell nearly 8% to the lowest for more than a year on Friday, registering a seventh consecutive weekly loss, amid growing fears of an overabundance of supply, even though that the major producers are planning to reduce their production.
Oil supply, dominated by US producers, is growing faster than demand and, in order to prevent any accumulation of unused fuel such as that which emerged in 2015, the Organization of the Petroleum Exporting Countries (OPEC) is expected to start reducing production meeting December 6. But so far, this has done little to push up prices, which fell more than 20% in November after seven weeks of losses.
Prices were likely to see their largest decline in a month since the end of 2014. A trade war between the world's two largest economies and major oil consumers, the United States and China, weighed on the market.
Oil hit its lowest level in a year due to concerns over growth in the global surplus
"The market is looking at an economic slowdown and they expect the trade talks with China to not go well," said Phil Flynn, an analyst at the Price Futures Group in Chicago, referring to the US president's expected talks. Donald Trump next week and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires.
"The market does not believe that OPEC will be able to act fast enough to compensate for the slowing demand that announces," Flynn said. Futures contracts on Brent stabilized at $ 3.80 per barrel, or 6.1% to $ 58.80. During the session, the benchmark fell to $ 58.41, the lowest level since October 2017. Intermediate US West Texas crude (WTI) lost $ 4.21, or 7.7% , to trade at $ 50.42, also the lowest since October 2017.
Smuggling of low quality oil goes unchecked
After the settlement, the contract continued to decline. For the week, Brent fell 11.3% and WTI, 10.8%, the largest decline in a week since January 2016. Market fears of weak demand have intensified after the announcement by China of its lowest gasoline exports for more than a year. in Asia and around the world. Gasoline inventories rose sharply in Asia, with inventories in Singapore, the regional refining hub, reaching their highest level in three months, while Japanese stocks also rose last week.
US stocks are about 7% higher than a year ago. Crude production has also increased this year.
Posted in The Express Tribune, November 25th, 2018.
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