Oil was showing little sign of recovering from its unprecedented decline as investors flee a market hammered by swelling supplies and a darkening demand outlook.
New York futures were little changed on Wednesday in Asia after plunging 7.1 percent in the previous session for the biggest one-day drop in three years. OPEC has given a dire forecast for 2019 demand just as American production and stockpiles steadily increase. Meanwhile, U.S. President Donald Trump’s Twitter critique of Saudi Arabia’s plan to curb output may dissuade other cartel members from similar moves, given the influence his past comments have had on OPEC actions.
West Texas Intermediate futures have fallen for a record 12 sessions on fears that a supply glut similar to the price-killing surplus of 2014 is redeveloping. In London, Brent futures have declined in 11 of the past 12 sessions.
Trump’s tweets have influenced OPEC in the past. In June, Saudi Arabia persuaded fellow oil producers to end 18 months of production cuts and pump more crude in response to falling output in Venezuela and Iran. OPEC leaders made clear Trump’s social media posts were the impetus for the production changes.
Donald J. Trump @realDonaldTrump Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!
Tuesday’s slide came after hedge funds largely gave up on higher prices, which some were saying just weeks ago could reach $100 a barrel. Money managers’ combined bullish positions in WTI and Brent sank to the lowest in 14 months as of Nov. 6, Commodity Futures Trading Commission data show, as long positions shrank and shorts increased.
WTI for December delivery was 2 cents lower at $55.67 a barrel at 9:32 a.m. in Tokyo. It dropped $4.24 on Tuesday to end the session at $55.69 a barrel on the New York Mercantile Exchange. Total volume traded Wednesday was about 42 percent above the 100-day average.
Brent for January settlement closed down $4.65 at $65.47 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.63 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. Russian Energy Minister Alexander Novak was less supportive, saying Monday in a Bloomberg television interview that “we have to wait and see how the market is unfolding.”
A surge in the dollar has also put pressure on crude prices. The Bloomberg Dollar Spot Index touched the highest since May 2017 early Tuesday, before slipping back.
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.
In the U.S., crude inventories stowed at the key pipeline nexus in Cushing, Oklahoma, rose by an estimated 2.5 million barrels last week, according to a forecast compiled by Bloomberg.