US Supply and Global Economy Make Oil Prices Decline
pojok warta. Jakarta, Crude oil prices slumped more than 2 percent in trading Monday (17/12), when the United States (US), due to a flood of supply signals in the US. In addition, investors are also concerned about global economic growth as well as fuel demand.
Reporting from Reuters on Tuesday (18/12), the price of Brent crude oil futures fell US $ 0.67 or 1.11 percent to US $ 59.61 per barrel. During the trading session, Brent prices had been depressed to the level of US $ 58.83 per barrel.
The weakening also occurred in the price of US Texas West Medium Intermediate (WTI) futures of US $ 1.32 to US $ 49.88 per barrel, after being pressured to US $ 49.9 per barrel. For the record, this is the first time WTI has closed at a level of less than US $ 50 per barrel since October 2017.
WTI prices slumped after Genscape data recorded inventories at the storage hub of Cushing, Oklahoma, up more than 1 million barrels during the period 11-14 December 2018.
Market participants pay attention to supply conditions at Cushing, given that the region is a shipping hub for futures contracts. As stocks rose at Cushing, US crude futures prices traded at US $ 0.33 earlier in the month, lower than WTI for the second month. The difference is the widest since October 2017.
"The numbers (inventories) at Cushing appear higher than anticipated. This certainly shows concern about the excess supply and weakening demand," said Price Futures Group Analyst Phil Flynn in Chicago.
According to Flynn, there are many shale oil producers who cannot make money with the current oil price, especially if it is below US $ 50 per barrel.
"Therefore, we will see cuts in a number of production estimates. However, that takes time. For now we are following the continuing momentum of weakness." he said.
Concerns about market growth in China and Europe continue to increase. This has a negative impact on the oil market and other assets.
In addition, the weakening of the stock market in Europe and the US on Monday (17/12) yesterday also dragged the capital market to the lower regions throughout the world. That worsened conditions after a sell-off that put global stock markets down to the lowest level in 17 months.
In fact, the prices of crude oil futures for Brent and WTI have fallen more than a third since the beginning of last October to the end of November. The lack of oil prices cannot be separated from the flood of supply that adds to global inventories.
Over the past three weeks oil prices have stabilized as plans for production cuts are made by a number of the world's major oil producers.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, have agreed to cut production by 1.2 million barrels per day (bpd) since January. At the meeting in April, the policy will be evaluated again.
To the media crew in Dubai, United Arab Emirates Energy Minister Suhail al-Mazrouei said the oil market was being corrected. Therefore, he hopes that all parties will follow the plan.
Nevertheless, a number of investors doubted that the cut was enough to re-balance the market.
Rising US shale oil production has captured the market share of Middle Eastern oil producers in OPEC, making it difficult for them to balance the budget.
In a US Energy Information Administration report released earlier this week, oil production from seven major US shale oil basins is expected to exceed eight million bpd by the end of the year.
In Russia, Reuters sources said production so far had reached a record 11.42 million bpd in December.
Meanwhile, in China, the results of the Tirau Bambu refinery in November were lower than in October. This indicates the easing of oil demand amid a slowdown in China's industrial sector production due to the economy which continues to lose momentum.
Reporting from Reuters on Tuesday (18/12), the price of Brent crude oil futures fell US $ 0.67 or 1.11 percent to US $ 59.61 per barrel. During the trading session, Brent prices had been depressed to the level of US $ 58.83 per barrel.
The weakening also occurred in the price of US Texas West Medium Intermediate (WTI) futures of US $ 1.32 to US $ 49.88 per barrel, after being pressured to US $ 49.9 per barrel. For the record, this is the first time WTI has closed at a level of less than US $ 50 per barrel since October 2017.
WTI prices slumped after Genscape data recorded inventories at the storage hub of Cushing, Oklahoma, up more than 1 million barrels during the period 11-14 December 2018.
Market participants pay attention to supply conditions at Cushing, given that the region is a shipping hub for futures contracts. As stocks rose at Cushing, US crude futures prices traded at US $ 0.33 earlier in the month, lower than WTI for the second month. The difference is the widest since October 2017.
"The numbers (inventories) at Cushing appear higher than anticipated. This certainly shows concern about the excess supply and weakening demand," said Price Futures Group Analyst Phil Flynn in Chicago.
According to Flynn, there are many shale oil producers who cannot make money with the current oil price, especially if it is below US $ 50 per barrel.
"Therefore, we will see cuts in a number of production estimates. However, that takes time. For now we are following the continuing momentum of weakness." he said.
Concerns about market growth in China and Europe continue to increase. This has a negative impact on the oil market and other assets.
In addition, the weakening of the stock market in Europe and the US on Monday (17/12) yesterday also dragged the capital market to the lower regions throughout the world. That worsened conditions after a sell-off that put global stock markets down to the lowest level in 17 months.
In fact, the prices of crude oil futures for Brent and WTI have fallen more than a third since the beginning of last October to the end of November. The lack of oil prices cannot be separated from the flood of supply that adds to global inventories.
Over the past three weeks oil prices have stabilized as plans for production cuts are made by a number of the world's major oil producers.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, have agreed to cut production by 1.2 million barrels per day (bpd) since January. At the meeting in April, the policy will be evaluated again.
To the media crew in Dubai, United Arab Emirates Energy Minister Suhail al-Mazrouei said the oil market was being corrected. Therefore, he hopes that all parties will follow the plan.
Nevertheless, a number of investors doubted that the cut was enough to re-balance the market.
Rising US shale oil production has captured the market share of Middle Eastern oil producers in OPEC, making it difficult for them to balance the budget.
In a US Energy Information Administration report released earlier this week, oil production from seven major US shale oil basins is expected to exceed eight million bpd by the end of the year.
In Russia, Reuters sources said production so far had reached a record 11.42 million bpd in December.
Meanwhile, in China, the results of the Tirau Bambu refinery in November were lower than in October. This indicates the easing of oil demand amid a slowdown in China's industrial sector production due to the economy which continues to lose momentum.
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