Oil Drops Most in 3 Years as Investors Flee Darkening Outlook
(Bloomberg) -- 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.
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.