Oil plunges 7% to new 2018 low
BOSTON: Oil prices slumped on Friday to their lowest levels in more than a year, with Brent set for a 12-per cent plunge this week, as fears that supply would overpower demand intensified, even as major producers considered cutting output.
Oil supply, led by US producers, is growing faster than demand and to prevent a build-up of unused fuel such as the one that emerged in 2015, the Organization of the Petroleum Exporting Countries is expected to start trimming output after a meeting on December 6.
But this has done little so far to prop up prices, which have dropped more than 20 per cent so far in November, in a sevenweek streak of losses. Deep trade disputes between the world’s two biggest economies and oil consumers, the United States and China, have weighed upon the market.
“The market is pricing in an economic slowdown — they are anticipating that the Chinese trade talks are not going to go well,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “The market doesn’t believe that Opec is going to be able to act swiftly enough to offset the coming slowdown in demand.” Brent crude oil fell $3.81, or 6.1 per cent, to $58.79 a barrel by 10:50 am EST (1550 GMT), after earlier touching $58.57, its lowest since October 2017.
US West Texas Intermediate crude (WTI) lost $3.75, or 7 per cent, to trade at $50.88, to touch a low of $50.60, also the weakest since October 2017.
For the week, Brent was on track for a 11.9 per cent loss and WTI a 9.7 per cent decline.
Prices were on course for their biggest one-month decline since late 2014.
Market fears over weak demand intensified after China reported its lowest gasoline exports in more than a year amid a glut of the fuel in Asia and globally.
Stockpiles of gasoline have surged across Asia, with inventories in Singapore, the regional refining hub, rising to a threemonth high while Japanese stockpiles also climbed last week. Inventories in the United States are about 7 per cent higher than a year ago.