U.S. oil prices drop 1 percent on oversupply fears

By Koustav Samanta SINGAPORE (Reuters) - U.S. oil prices fell 1 percent on Tuesday after slipping below $50 a barrel in the previous session, with reports of a big climb in U.S. inventories and forecasts of record shale output stoking worries about oversupply

Reuters December 18, 2018 07:05:22 IST
U.S. oil prices drop 1 percent on oversupply fears

US oil prices drop 1 percent on oversupply fears

By Koustav Samanta

SINGAPORE (Reuters) - U.S. oil prices fell 1 percent on Tuesday after slipping below $50 a barrel in the previous session, with reports of a big climb in U.S. inventories and forecasts of record shale output stoking worries about oversupply.

Concerns around future oil demand amid weakening global economic growth and doubts on the impact of planned OPEC-led production cuts were also hurting prices, traders said.

U.S. West Texas Intermediate (WTI) crude futures were at $49.35 per barrel at 0035 GMT, down 1.06 percent, or 53 cents, from their last settlement.

U.S. crude prices have tumbled more than 35 percent since early October and are currently at levels not seen since October 2017.

International Brent crude oil futures had yet to trade.

"Crude oil prices were lower amid fears of weaker demand pushing inventories higher in the United States," ANZ Bank said on Tuesday.

Oil production from seven major U.S. shale basins is expected to surpass 8 million barrels per day (bpd) by the end of the year, the U.S. Energy Information Administration said in a monthly report on Monday.

Inventories at the U.S. storage hub of Cushing, Oklahoma, rose by more than 1 million barrels from Dec. 11 to 14, traders said, citing data from market intelligence firm Genscape on Monday.

"Investors also remained concerned that OPEC will struggle to keep to its agreement to reduce output. This is likely to see prices remain under pressure until there is evidence that output is being cut," ANZ Bank said in a note.

Supply curbs agreed by the Organization of the Petroleum Exporting Countries (OPEC) and its Russia-led allies might not bring about the desired results as U.S. output goes on increasing and as Iran keeps pumping out more oil, analysts said.

Fuelling those doubts, Russian oil output has been at a record-high of 11.42 million barrels per day (bpd) so far in December.

"There remains high suspicion as to what extent Russia will fill their commitment," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

"But enveloping supply concerns is the increasing likelihood of a protracted economic downturn in China that continues to stoke fears of demand slowdown," Innes added.

China's November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years as the economy lost further momentum.

Meanwhile, the U.S. Federal Reserve is widely expected to raise interest rates again at the end of its two-day meeting on Wednesday, impacting the dollar, which in turn may usher a major move in oil prices, analysts said.

(Reporting by Koustav Samanta in Singapore; Editing by Joseph Radford)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.