Oil Futures Plummet 7 Percent to Lowest Level In Over A Year

Oil prices steady near year lows ahead of G20 OPEC meeting

Front-month Brent crude oil futures LCOc1 had risen by 96 cents, or 1.6 percent, to $59.76 per barrel by 0745 GMT.

At the same time, crude stocks have now climbed for eight consecutive weeks, surely a sign that the market is decidedly back in a surplus situation.

Oil prices have collapsed 30 percent in less than two months on concern that booming USA shale production and faltering demand - combined with unprecedented output from the Saudis and Russian Federation - will trigger a new surplus next year. "T$3 he oil market is a lot cleaner now from a positioning standpoint".

Saudi Arabia and OPEC are inching toward a compromise between pleasing the US with policies that won't lead to price spikes and throttling back the flow of its oil to rebalance oversupplied global markets. Russia, Saudi Arabia and USA together added over two million bpd in the last six month, due to which supply has surpassed demand. Its budget deficit swelled to a record $100 billion in 2015 (15% of GDP) and the International Monetary Fund warned that some Gulf countries, including Saudi Arabia, could run out of money within five years if prices stayed low. However, this is conditional on Opec=plus reducing supply.

This recovery is unlikely to last, as structurally demand should slow down in 2019-20 based on our economists' projections for GDP.

The American crude marker teeters near the $50 threshold as the Saudi output surge combines with larger-than-expected exports of Iranian oil after Trump granted sanctions waivers to some nations.

"We suspect that producers will start to withhold exports in the coming months, putting a floor under prices", Capital Economics said. Oil prices dived 8% on Friday for the biggest weekly losses in almost three years. "Given that inventories are still not too high, we believe oil prices should find some support from a fundamental perspective", BofAML wrote.

Prices rallied sharply on Monday, with Brent rising nearly 2.9 percent, but the market has struggled to stay positive.

Still, a price increase from current levels hinges on action from OPEC+.

In what way do you feel Opec will respond when its members meet next month? .

Saudi Arabia is reported to have hit oil production in the neighborhood of 11.1 to 11.3 million barrels per day, sweeping the legs out from underneath crude traders who tentatively began bidding barrels prices higher after a surprise drawdown in USA stocks.

The price of Crude Oil West Texas took roughly two and a half years to rally from the trough of $26 per barrel to the peak above $77 per barrel. But apart from this short-term boost, we maintain our long held view on oil products demand growth softening in 2019 to 1.1 million bpd from 1.5 million bpd in 2018. That is an increase of 500,000 Bpd from the group's forecast six months ago.

U.S. President Donald Trump is open to a trade deal with China but is prepared to hike tariffs on Chinese imports if there is no breakthrough on longstanding trade irritants during a Saturday night dinner with Chinese leader Xi Jinping, White House economic adviser Larry Kudlow said on Tuesday.



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