Oil sank to another one-year low in New York as a sell-off in equities worsened crude market sentiment, already soured by signs of plentiful American supplies.
Futures in New York slipped as much as 4.1 percent after closing below $50 a barrel on Monday for the first time since October 2017. The U.S government expects shale-oil production to surge, potentially swelling already-abundant inventories. Equities across Europe and Asia slid after a speech by Chinese President Xi Jinping offered no new reforms to stimulate the world’s second-biggest economy.
Crude’s mired in a bear market amid growing skepticism that the Organization of Petroleum Exporting Countries and its allies’ production cuts will be deep enough to prevent a surplus in 2019. Mounting fears over the relentless growth in U.S. shale, which veteran crude trader Andy Hall said is making it hard to predict global supplies, has undermined the OPEC+ group’s efforts to balance the market.
“The oil market has come under renewed pressure” and “a large part of the move is due to a broader market sell-off,” said Warren Patterson, commodities strategist at ING Bank NV. “Specifically for the oil market, there are no clear signs yet of the market tightening.”
West Texas Intermediate for January delivery fell as much as $2.04 to $47.84 a barrel on the New York Mercantile Exchange, the lowest since September 2017, and was at $48.59 at 7:53 a.m. local time. The contract closed 2.6 percent lower on Monday. Total volume traded Tuesday was about 49 percent above the 100-day average.
Brent for February settlement lost $1.34, or 2.3 percent, to $58.27 a barrel on London’s ICE Futures Europe exchange, after dropping 1.1 percent on Monday. The global benchmark crude traded at a $9.28 premium to WTI for the same month.
Stocks benchmarks from Shanghai to London fell on Tuesday. The S&P 500 declined to its lowest close since October 2017 on Monday, and the Russell 2000 Index of smaller companies entered a bear market. Investors are also bracing for a potential U.S. Federal Reserve interest-rate increase, and will be scrutinizing the bank’s statement Wednesday for clues on its intentions for 2019.
Data provider Genscape Inc. was said to report crude inventories at America’s biggest storage hub in Cushing, Oklahoma, are growing. The Energy Information Administration said it sees output at major U.S. shale plays at 8.166 million barrels a day in January and boosted its December forecast to 8.03 million.
U.S. nationwide stockpiles probably decreased 3.25 million barrels in the week ended Dec. 14, according to a Bloomberg survey before government data is released Wednesday. Still, inventories at Cushing probably rose by 1.3 million barrels last week, according to a separate forecast compiled by Bloomberg.
Other oil-market news: Russia plans to achieve about 228,000 barrels a day of outputcuts within the first quarter of next year, Energy Minister Alexander Novak said. The cuts will be voluntary for the country’s producers and proportional to their output volumes. Saudi Arabia’s October oilexports rose to a 22-month high of 7.7 million barrels a day, according to figures posted on websiteof Joint Organisations Data Initiative. The kingdom pumped a record 10.64 million barrels of a day in October, helping lift exports, according to figures posted on websiteof Joint Organisations Data Initiative. Kuwaiti Oil Minister Bakheet Al-Rashidi and two top executives of state-owned energy companies resigned amid persistent internal disputes that have been delaying projects in OPEC’s fifth-biggest producing country.