Oil fell for a 12th consecutive session in its longest losing streak on record after US President Donald Trump criticised top OPEC producer Saudi Arabia’s plan to cut output.
Futures in New York fell as much as 1.8 percent, extending a drop of over 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 from October production levels.
Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!— Donald J. Trump (@realDonaldTrump) November 12, 2018
A slump in US equity markets and the dollar’s climb to an 18-month high also weighed on crude, which slid into a bear market last week.
Oil has retreated from a four-high reached in early October as fears of a supply glut deepened after the US gave some nations waivers from its sanctions to continue buying Iranian crude while American output and inventories climbed. With a trade war between the US and China stoking concerns over the global economy, investors are watching if the Organization of Petroleum Exporting Countries and its allies will pump less.
“Trump’s message was intended to keep OPEC in check” after the group signalled they may agree to cut production, Makiko Tsugata, a senior analyst at Mizuho Securities Co., said by phone from Tokyo.
“There is not a lot of time left before the OPEC meeting in December, and the group may not be able to build consensus by then. It remains to be seen whether OPEC will agree” on cuts, Tsugata said.
West Texas Intermediate for December delivery declined as much as $1.08 to $58.85 a barrel on the New York Mercantile Exchange and traded at $59.23 at 12:46 p.m. in Tokyo. The contract fell 26 cents to $59.93 on Monday, the lowest close since Feb. 13. Total volume traded was slightly above the 100-day average.
Brent futures for January settlement fell 59 cents to $69.53 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 6 cents to end at $70.12 on Monday, the lowest close since April 9. The global benchmark crude traded at a $10.17 premium to WTI for the same month.
A closely watched meeting between OPEC and allied producers including Russia on Sunday yielded no formal change in output policy, but the producers warned that they may need “new strategies.” Meanwhile, Saudi Arabia unveiled a plan over the weekend to reduce its 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 over the weekend raised the odds of an output 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 also predicts a similar decrease, said the size of curbs will likely depend on demand growth, Iranian supply and US production.
In wider financial markets, S&P 500 Index futures fell, while the Bloomberg Dollar Spot Index was little changed after increasing 0.6 percent Monday to the highest in 18 months. The strength in the greenback -- which reduces the appeal of commodities priced in the US currency -- may persist if the Federal Reserve raises interest rates again next month as expected, Mizuho’s Tsugata said.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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