Oil drops Monday, with U.S. prices below $50 to mark their lowest settlement in over a year
By Myra P. Saefong / MarketWatch
Petroleumworld 12 17 2018
The market failed to stabilize after a weekly loss, with prices suffering additional pressure from data that reportedly revealed a jump in crude stocks at the U.S. trading hub.
Oil prices turned lower in morning dealings—apparently after commodity data provider Genscape reported that Cushing, Okla., crude inventory rose by 630,000 barrels last week, “which was more than expected,” said Fawad Razaqzada, technical analyst at Forex.com. “Genscape provides Cushing storage measurements, delivered two days before [the Energy Information Administration] estimates,” he said.
January West Texas Intermediate crude CLF9, -1.14% fell $1.32, or 2.6%, to settle at $49.88 a barrel on the New York Mercantile Exchange. That was the lowest finish for a front-month contract since Oct. 9, 2017, according to Dow Jones Market Data. February Brent LCOG9, -2.69% the global benchmark, lost 67 cents, or 1.1%, to $59.61 a barrel on ICE Futures Europe—its lowest since Nov. 30 of this year.
A sharp selloff that pushed WTI and Brent into bear markets in November came after a buildup in speculative long positions. Those net long positions were cut further to less than 100,000 contracts in the past week, wrote analysts at Commerzbank, in a note. The number of long Brent positions rose for the first time in 11 weeks, they said, citing Commodity Futures Trading Commission data.
Also, oil-field services firm Baker Hughes on Friday reported a fall in the U.S. oil-rig count to its lowest since mid-October, reflecting pressure on shale oil prices, which have been trading below $45 a barrel since late November, the analysts said, noting that “a smaller increase in U.S. shale oil production would make it easier for OPEC+ to rebalance the oil market next year.”
Shale output, however, looks set to continue to grow. On Monday, the EIA released its monthly Drilling Productivity report, forecasting a rise of 134,000 barrels a day in U.S. shale oil production for January to 8.166 million barrels a day.
Benchmark U.S. stock indexes declined on Wall Street, highlighting a risk-off sentiment that likely contributed to losses for oil, some analysts said. Stock indexes had ended last week in a rout that pushed the Dow Jones Industrial Average DJIA, -2.11% back into correction territory and sending the S&P 500 SPX, -2.08% to its lowest close since April.
In other energy trade, January gasoline RBF9, -0.95% settled at $1.41 a gallon, down 1.7%, while January heating oil HOF9, -0.83% shed 1%, to $1.827 a gallon.
January natural gas NGF19, +1.67% sank 7.8% to $3.528 per million British thermal units, with prices at their lowest since Nov. 2. That was the biggest one-day percentage decline since Nov. 15.
Natural gas built on a sharp decline seen last week on forecasts for warmer-than-normal to normal temperatures to the end of the month that imply less demand for the heating fuel.
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Reporting by Myra P. Saefong from MarketWatch.
marketwatch.com 12 17 2018 21:01 GMT
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