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SINGAPORE (Reuters) – The oil sector struggled to find its balance Wednesday after plunging 7 percent from the previous session, as supply rose and the specter of declining demand declined. scared investors.
PHOTO FEATURE: Oil is pouring out a beak from the original 1859 well of Edwin Drake who launched the modern oil industry at the Drake Well Museum and Park in Titusville, United States, on October 5, 2017. REUTERS / Brendan McDermid / File Photo
The WTI (West Texas Intermediate) crude futures were $ 55.52 per barrel at 7:32 am GMT, down 17 cents (0.3%) from their latest settlement.
The international benchmark on Brent crude oil futures, LCOc1, fell 9 cents to 65.38 dollars a barrel.
Crude oil has lost more than a quarter of its value since the beginning of October, which is one of the biggest declines since the collapse of prices in 2014.
"Crude oil futures have come under extremely bearish pressure in the middle of … weaker market fundamentals," said Benjamin Lu, an analyst at Phillip Futures, a brokerage firm in Singapore.
Falling spot prices completely reversed the crude oil futures curve.
Spot prices in September were significantly higher than those for later deliveries, a structure known as backwardation that involves a tense market because it is not worthwhile to store oil.
By mid-November, the curve had shifted into contango, when crude prices for immediate delivery were cheaper than those for later shipment. This implies a saturated market, because it is interesting to store oil for resale later.
The oil markets are under pressure from two sides: an increase in supply and growing concern over the economic slowdown, as evidenced by the economic contractions observed in Japan and Germany in the third quarter, as well as the drop in auto sales. China.
Production of US crude oil from its seven major shale basins is expected to hit a record 7.94 million barrels per day (bpd) in December, the Energy Information Administration (EIA) of the US Department of Energy (US) said Tuesday. Energy.
This increase in land-based production has allowed the overall US crude oil production C-OUT-T-EIA to hit a record 11.6 million bpd, making the United States the world's largest oil producer ahead of Russia and Saudi Arabia.
Most analysts expect US production to exceed 12 million barrels per day in the first half of 2019.
"We estimate this will cap any excess at $ 85 per barrel (for the price of oil)," said Jon Andersson, Commodities Manager at Vontobel Asset Management.
The increase in production in the United States contributes to the increase in inventories.
The official storage data is to be reported Wednesday to the Energy Information Administration, analysts expecting an increase of 3 million barrels of crude oil stocks.
The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) has watched with alarm the soaring drop in supply and prices.
OPEC has stated more and more publicly that it will start retaining crude from 2019 to tighten inventory and drive up prices.
"The OPEC and Russia are under pressure to reduce current production levels, a decision that should be made at the next OPEC meeting on December 6," Andersson said.
This puts OPEC on a collision course with US President Donald Trump, who publicly supports low oil prices and has asked OPEC not to cut production.
Report by Henning Gloystein; Edited by Joseph Radford and Richard Pullin
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