Oil fell for a 12th day, its longest losing streak on record, after U.S. President Donald Trump criticized Saudi Arabia’s plan to cut output.
West Texas Intermediate futures in New York sank as much as 2.8 percent, extending a drop of more than 11 percent since Oct. 26. Prices “should be much lower based on supply,” Trump said in a tweet, after Saudi Energy Minister Khalid Al-Falih said producers need to cut about 1 million barrels a day. Meanwhile, OPEC said in its monthly report released Tuesday that it sees demand for its own crude falling even faster than expected in 2019 as a slowing global economy crimps demand and rival supplies surge.
Oil has fallen from a four-year high reached in early October as fears of a supply glut deepen following a U.S. decision to grant waivers to some buyers of sanctioned Iranian crude. With rising American output and inventories, and a trade war with China stoking concerns over global economic growth, Trump’s Twitter intervention will only add to speculation surrounding OPEC’s next move.
“This tweet certainly did not help prices, with WTI settling lower yesterday, and the downward pressure on both Brent and WTI has continued this morning,” said Warren Patterson, a senior commodities strategist at ING Bank NV. “Given the growing global surplus over the first half of 2019, OPEC will likely try to ignore President Trump’s call as much as possible.”
WTI for December delivery declined as much as $1.69 to $58.24 a barrel on the New York Mercantile Exchange, and traded at $58.65 as of 11:47 a.m. London time. The contract fell 26 cents on Monday to the lowest close since Feb. 13. Total volume traded Tuesday was about 67 percent above the 100-day average.
Brent futures for January settlement fell $1.44 to $68.68 a barrel on the London-based ICE Futures Europe exchange, after dropping 6 cents on Monday to a seven-month low. The global benchmark crude traded at a $9.90 premium to WTI for the same month.
A closely watched meeting between the Organization of Petroleum Exporting Countries and its allies including Russia on Sunday yielded no formal change in output policy, but delegates warned they may need “new strategies.” Saudi Arabia also unveiled a plan over the weekend to reduce its own shipments by about 500,000 barrels a day next month. Oil chiefs from Venezuela and Oman indicated they may side with the kingdom on the issue of output cuts.
The meeting in Abu Dhabi raised the odds of a production cut next month to “fairly high,” and the reduction may be in the 1 million-barrels-a-day range, according to RBC Capital Markets. UBS Group AG, which predicts a similar decrease, said the size of the curbs will probably depend on demand growth, Iranian supply and U.S. production.
Other oil-market news: There’s a risk the world is becoming too reliant on the rapid growth of U.S. shale oil, according to the International Energy Agency’s latest World Energy Outlook. U.S. crude inventories probably rose by 3.09 million barrels last week, according to a Bloomberg survey of analysts before government data due Thursday.If EIA data confirms that gain, it will be an eighth consecutive increase, the longest streak since March. Crude inventories in the Cushing storage hub in Oklahoma may have increased by 2.5 million barrels last week, according to a forecast compiled by Bloomberg.