Oil Sinks to 14-Month Low
December 18 2018 - 10:22AM
Dow Jones News
By Sarah Mcfarlane
--Oil prices fell sharply Tuesday on a combination of negative
factors, including spillover selling pressure from global equity
markets and rising output in key producers.
--West Texas Intermediate futures, the U.S. oil standard, were
down 2.7% at $48.53 a barrel on the New York Mercantile
Exchange.
--Brent crude, the global oil benchmark, was trading down 1.5%
at $58.72 a barrel on London's Intercontinental Exchange, having
earlier sunk to $57.20, its lowest level since October 2017.
HIGHLIGHTS
Global Markets: European and Asian stocks fell on Tuesday
following a sharp drop on Wall Street at the start of the week,
with investors nervous about the outlook for global economic
growth. "There's been a correlation between equities and oil prices
in the last week or so, so it's [selling pressure] spilling over
from equities into oil prices," said Michael Poulsen, oil analyst
at consultancy Global Risk Management.
INSIGHT
Rising output: News reports Monday, which were negative for oil
prices, included data showing Russian crude production was higher
in the first two weeks of December versus November and the return
of the Buzzard field in the North Sea after supply disruption, said
Giovanni Staunovo, commodity analyst at UBS Wealth Management.
Meanwhile, plans by the Organization of the Petroleum Exporting
Countries to cut output are yet to be implemented. "The cuts will
only be implemented in January, we're still in December, the only
one that's cutting is Saudi Arabia," said Mr. Staunovo.
Shale Growth: Data on Monday from the U.S. Energy Information
Administration's monthly Drilling Productivity Report showed U.S.
oil production from seven key shale regions is expected to rise to
a record-high 8.2 million barrels a day next month, versus 8.0
million this month. It also showed shale regions continue to
increase the amount of so-called DUCs -- drilled-but-uncompleted
wells -- which means they'll continue to be able to ramp up
production. "EIA's latest drilling productivity report layers on
bearishness, as producers keep getting more productive and building
DUCs," said analysts at Baird in a research note Tuesday.
AHEAD
The American Petroleum Institute releases its weekly statistical
bulletin at 4:30 p.m. ET Tuesday.
--Dan Molinski contributed to this report.
Write to Sarah McFarlane at sarah.mcfarlane@wsj.com
(END) Dow Jones Newswires
December 18, 2018 10:07 ET (15:07 GMT)
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