London: Oil sank to another one-year low in New York as a sell-off in equities worsened crude market sentiments already soured by signs of plentiful American supplies. Futures in New York slipped as much as 4.1% after closing below $50 on Monday for the first time since October 2017. The US government expects shale-oil production to surge, potentially swelling already-abundant inventories. Equities across Europe and Asia slid after a speech by Chinese President Xi Jinping offered no new reforms to stimulate the world’s second-biggest economy.
Crude’s mired in a bear market amid growing skepticism that the Organization of Petroleum Exporting Countries and its allies’ production cuts will be deep enough to prevent a surplus in 2019. Mounting fears over the relentless growth in US shale, which veteran crude trader Andy Hall said is making it hard to predict global supplies, has undermined the OPEC+ group’s efforts to balance the market.
“The oil market has come under renewed pressure" and “a large part of the move is due to a broader market sell-off," said Warren Patterson, commodities strategist at ING Bank NV. “Meanwhile, specifically for the oil market, there are no clear signs yet of the market tightening."
West Texas Intermediate for January delivery fell as much as $2.04 to $47.84 a barrel on the New York Mercantile Exchange, the lowest since September 2017, and was at $48.46 at 9:43 a.m. in London. The contract closed 2.6% lower on Monday. Total volume traded Tuesday was about 90% above the 100-day average.
Brent for February settlement lost $1.73, or 2.9%, to $57.88 a barrel on London’s ICE Futures Europe exchange, after dropping 1.1% on Monday. The global benchmark crude traded at a $9.16 premium to WTI for the same month.
Stock benchmarks from Shanghai to London fell on Tuesday. The S&P 500 declined to its lowest close since October 2017 on Monday, and the Russell 2000 Index of smaller companies entered a bear market. Investors are also bracing for a potential US Federal Reserve interest-rate increase, and will be scrutinizing the bank’s statement Wednesday for clues on its intentions for 2019.
Genscape Inc., a data provider, was said to report inventories at America’s biggest storage hub in Cushing, Oklahoma, are growing. The Energy Information Administration said it sees output at major US shale plays at 8.166 million barrels a day in January and boosted its December forecast to 8.03 million.
US nationwide stockpiles probably decreased 3.25 million barrels in the week ended Dec. 14, according to a Bloomberg survey before government data is released Wednesday. Still, inventories at Cushing probably rose by 1.3 million barrels last week, according to a separate forecast compiled by Bloomberg.
This story has been published from a wire agency feed without modifications to the text.