Oil markets lost momentum on Tuesday, 20 November 2018, as a softer economic outlook and a jump in U.S. output outweighed expectations that OPEC would move to cut supply.
Brent crude futures were at $66.43 a barrel at 0608 GMT, down 36 cents, or 0.5 percent. West Texas Intermediate futures stood at $56.97 a barrel, 23 cents lower, or 0.4 percent.
Prices had already shown weakness after earlier gains failed to hold. Benjamin Lu of Singapore-based brokerage Phillip Futures said: “Upside potential has shown to be shaky as bullish movements lose steam,”
The retreat left oil almost a quarter below the highs reached in early October. The main pressure came from rising supply, especially from the United States, where crude production had climbed by almost 25 percent in 2018 to a record 11.7 million barrels per day.
That increase came alongside growing concern about the global economy. Asian shares fell on Tuesday after sharp losses on Wall Street the previous day, adding to caution among traders who were already worried about energy demand.
Portfolio managers also cut their exposure sharply. Over the previous seven weeks, they sold the equivalent of 553 million barrels of crude and fuels, the biggest reduction over a comparable stretch since at least 2013. Net long positions fell to 547 million barrels, down from 1.1 billion at the end of September and from a record 1.484 billion in January.
OPEC weighs another supply cut ¶
OPEC has been trying to prevent another glut similar to the one that helped trigger the 2014 price collapse. The group was pushing for a cut of between 1 million and 1.4 million barrels per day, and BNP Paribas said it expected members to agree to a supply cut at their next official meeting on 6 December.
The bank said it expected Brent to recover to $80 a barrel before year-end. It also forecast that in 2019 WTI would average $69 a barrel and Brent $76 a barrel.
The International Energy Agency, which represents oil consumers, warned on Monday about the “negative implications” of supply cuts. Analysts said a sharp rise in crude prices could hurt consumption, leaving OPEC with a difficult balance between supporting prices and avoiding weaker demand.
The Reuters report also noted that a file photo used with the story was taken on 5 October 2017 at the Drake Well Museum and Park in Titusville, Pennsylvania, showing oil pouring from Edwin Drake’s original 1859 well.
Reporting by Henning Gloystein; Editing by Christian Schmollinger and Joseph Radford.
