Oil price drops on Trump tweet

14 November, 2018, 06:35 | Author: Sally Reid
  • Oil Price Enters Bear Market Even as U.S. Crude Output Hits Record-High

Brent crude dropped below US$70 (RM294) a barrel last Friday for the first time since April while the New York's West Texas Intermediate sank below US$60 a barrel, a nine month low.

The latest price slump comes after the United States boosted production of shale oil, while Saudi Arabia, Russia and others raised supplies of crude amid signs of slowing demand.

Saudi Energy Minister Khalid al-Falih said OPEC and its allies agree that technical analysis shows a need to cut oil supply next year by around 1 million bpd from October levels.

"In the short term this is a positive for oil, but we must question the impact longer term unless it's the sign of more to come from OPEC", said Neil Wilson, chief market analyst at Markets.com.

Oil's slide accelerated on Tuesday, with USA futures dropping to lows not seen in 11 months due to ongoing worries about weakening global demand, oversupply and sell offs across other asset classes, including equities.

As uncertainty beclouds the future of crude prices, members of the Organisation of Petroleum Exporting Countries (OPEC), met yesterday November 11th, in Abu Dhabi to decide on how to cut crude supply in order to forestall further declines in price. Russian Federation has given mixed signals about a cut, with Lukoil Chief Executive Vagit Alekperov saying on Monday that he did not see cuts being necessary. "So far I don't see any necessity for this".

Oil producers need oil prices to be high enough so that budgets can be balanced but they should also be low enough so that oil demand can be stimulated.

US crude futures CLc1 settled down $4.24 a barrel, or 7.1 percent, to $55.69 a barrel. OPEC members may be weighing oil production cuts again, anxious that a slowing global economy will undermine prices, but in the group's Middle East heartland producers are spending billions to add output capacity for the long term.

Six Injured After Boeing Jet Crash-Lands at Guyana Airport
Police Commissioner, Leslie James, said there is an adequate number of security personnel at the airport around the crash site. National Transportation Safety Board has been notified of the incident, in order to support the investigation.

Rising U.S. output played a big role in popping the recent oil price bubble.

Saudi Arabia expresses the need for oil producers to cut 1 million barrels a day from October levels.

In this light, Saudi Arabia has announced a new round of output cuts aimed at supporting the prices - which are, in the near-term, still expected to remain at that country's fiscal breakeven, estimated at roughly $70/bbl.

Root added that commodity prices that are influenced by cartels such as OPEC, which controls almost a third of global oil production, do not necessarily rise and fall with economic cycles.

The US criticised OPEC, which Saudi Arabia is the nominal leader of, after prices rose.

But the USA president undercut that headline quickly, sending crude prices plunging with a Tweet, expressing the hope that Saudi Arabia will not cut output.

These swing producers can influence prices by artificially capping oil supply, but doing so is a unsafe game.

Dutch bank ING said an abundance of global supply as well as the threat of economic slowdown meant "cuts over 2019 are unavoidable".

Recommended:



Popular

Steelers RB James Conner could practice Wednesday
Up until late last week, the Steelers were bracing for the return of Bell, who played basketball at a local LA Fitness last week. The saga really began all the way back in the spring of 2017, when the Steelers hit Bell with the franchise tag.

Bogey on 18 cuts Garcia's lead at Nedbank Golf Challenge
But after birdieing the par-four 13th, the four-time major victor twice drove into the bushes, leading to sixes at the par-five 14th and the par-four 17th.

Police arrest woman in Australian needle-in-strawberry scare
The woman was arrested and charged with seven counts of contamination of goods under Section 238 Criminal Code on Sunday evening. Earlier, police spoke of the challenges investigators faced as they tried to figure out the source of the contamination.

Fire chief urges California residents to heed evacuation alerts
But Cal Fire spokesman Bill Murphy warned that gusty winds predicted into Monday morning could spark "explosive fire behavior". Four search and recovery teams are now combing through the remains of Paradise and a mobile DNA lab has been dispatched.

Saudi king hosts Abu Dhabi crown prince amid Yemen offensive
Saudi strikes have hit public markets, hospitals and other nonmilitary targets, killing scores of civilians. U.S. defense secretary Jim Mattis backed the decision and said the USA government was consulted.

Why Manchester United fans have cause for optimism vs Manchester City
United manager Mourinho declined to answer in depth when asked if he thought about the allegations against City. Manchester United boss Jose Mourinho insists his team is still being built.

It’s Fair To Wonder If Dez Bryant’s NFL Career Is Now Over
The New Orleans Saints fear Dez Bryant suffered a torn Achilles tendon during practice on Friday. The former Dallas Cowboys wide receiver just announced his contract with the Saints on Wednesday.

Meg Ryan, John Mellencamp are engaged, Entertainment News & Top Stories
John's comments on the Howard Stern Show were rare as neither he nor private Ryan have shared much publicly about their romance. The actress, 56, who was previously married to actor Dennis Quaid , starred in both films with Tom Hanks.

Thousands flee California town devastated by wildfire
People are now staying in shelters in the town of Chico, some 14 miles away. Thousands of firefighters are battling the flames.

Kim Kardashian and Alyssa Milano flee their homes as California wildfires rage
The City of Calabasas' official Twitter account noted the Woolsey fire grew to over 2,000 acres with zero percent containment. It comes just after reports that Kim's stepfather, Caitlyn Jenner, has lost her California home in the wildfires.