Published: Fri, January 04, 2019
Money | By Ralph Mccoy

Oil falls towards $53 on economic worries, surging supply

Oil falls towards $53 on economic worries, surging supply

Brent crude, the global benchmark for crude oil prices, were up 21 cents at $53.42 a barrel by 1:28pm EST, while US West Texas Intermediate (WTI) crude futures were 10 cents higher at $45.43 a barrel. But at the same time, his sanctions on Iran's oil reduced supplies by at least a million barrels per day.

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In 2018, WTI has lost more than 25 per cent, while Brent was down by more than 21 per cent.

According to an arrangement by the oil cartel, OPEC members will reduce production by 800,000 barrels per day (bpd), while non-OPEC producing countries will cut production by 400,000bpd to bring total oil cuts to 1.2 million bpd.

Brent crude fell 70 cents to $53.10 a barrel at 0838 GMT.

Oil markets dropped by around one per cent in 2019's first trading on Wednesday, pulled down by surging USA output and concerns about an economic slowdown in 2019 as factory activity in China, the world's biggest oil importer, contracted.

For the year, US West Texas Intermediate crude (WTI) futures slumped almost 25 percent, while Brent tumbled more than 19.5 percent.

The market direction might get dictated if USA shale producers disregard bearish signals in oil prices and push for higher output next year, Jiaxuan said.

US President Donald Trump said he had a "long and very good call" with Chinese President Xi Jinping and that a possible trade deal between the United States and China was progressing well.

The current downward pressure on oil prices should likely taper off from January, when OPEC-led supply cuts commence, analysts said.

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Oil prices fell in 2018 for the first year since 2015 after buyers fled the market in the fourth quarter over growing worries about excess supply and the economic slowdown. "Do you think it's just luck that gas prices are so low, and falling?"

The "Saudis are trying to engineer a fall, if not plunge, in US crude oil inventories to give the appearance of global tightness", said John Kilduff, founding partner at energy hedge fund Again Capital.

Instead, Brent prices have wiped out all of 2018's gains, plunging by nearly 40 percent from the year's high, in what has been one of the steepest oil market sell-offs of the past decades. Analysts expect oil prices to rebound next year, but the geopolitical risks that have weighed on the market throughout 2018 will remain a big variable in the New Year.

Trump, meanwhile, kept up his campaign to push prices down, boasting in a tweet Tuesday about low gasoline prices that he likened to a tax cut for consumers.

THE Organisation of Petroleum Exporting Countries, OPEC, world oil demand has been projected to rise by1.29 million barrels per day, bpd in 2019.

Independent market analyst Greg McKenna said in a note on Wednesday that it was "difficult for traders and investors to ignore what looks like a genuine global economic slowdown".

Iran could lose more oil exports if the USA had not given sanctions waivers to several friendly countries, such as India and Japan.

"The market had largely priced in renewed production cuts from OPEC".

Weekly data, which is more open to revisions, was reported last week at 11.7 million bpd in late December by the EIA.

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