Seoul: Oil’s on track for its worst month since 2016 as the specter of a slowing global economy haunts the market that’s grappling with growing U.S. inventories and mixed signals from producers. Futures in New York are poised for a 9.3 percent drop this month, ending two months of gains. Prices have slipped from a four-year high this month as concerns that American sanctions on Iran would squeeze supply were overshadowed by a rout in global equities and an escalating trade dispute between the U.S. and China.
Oil has lost more than 10 percent after breaching $76 a barrel earlier this month. With U.S. sanctions against the Persian Gulf state taking effect later this week, investors are assessing different output signals from Organization and Petroleum Exporting Countries and its allies. Saudi Arabia, which is under scrutiny over the killing of journalist Jamal Khashoggi, has said the group is in “produce as much as you can mode," while an OPEC committee said it could cut supplies next year.
“In the oil market, concerns continue to exist over the ongoing U.S.-China trade spat as well as the risk aversion sentiment that’s caused by a plunge in global shares," Kim Kwangrae, a commodities analyst at Samsung Futures Inc., said by phone. “Prices couldn’t remain above $75 a barrel this month on rising U.S. inventories and strong indication from Saudi Arabia to ramp up production."
West Texas Intermediate for December delivery traded at $66.45 a barrel on the New York Mercantile Exchange, up 27 cents, at 11:50 a.m. in Seoul. The contract had declined more than 2 percent in the past two sessions. Total volume traded was about 26 percent below the 100-day average.
Brent for December settlement, which expires Wednesday, added 47 cents to $76.38 a barrel on the London-based ICE Futures Europe exchange. Prices are on course for a 7.7 percent drop this month, the biggest monthly loss since July 2016. The global benchmark crude traded at a $9.92 premium to WTI. The more-active January contract was up 50 cents.