U.S. Oil Prices Drop Under $47 on Growth and Glut Fears
December 18 2018 - 12:51PM
Dow Jones News
By Dan Molinski and Sarah McFarlane
--U.S. oil prices fell more than 5% to under $47 a barrel
Tuesday on continued worries over a drop in demand if the global
economy slows and recent data showing rising production from major
producers that may lead to a glut.
--West Texas Intermediate futures, the U.S. oil standard, were
down 2.7% at $48.53 a barrel on the New York Mercantile Exchange.
Prices fell to as low as $46.97 intra-day.
-- 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 Tuesday following
a sharp drop Monday on Wall Street, with investors nervous about
the outlook for global economic growth. That led oil to decline
overnight, and although U.S. stock markets rebounded some Tuesday
oil prices have kept falling into the New York session. "This is
just a continuation of oil reeling lower on worries of slower
economic growth that could impact demand next year," said Eugene
McGillian, vice president of market research at Tradition Energy.
"Also, we had U.S. data from the Drilling Productivity Report
yesterday that points to production continuing to rise into next
year."
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 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
million this month. It also showed shale regions continue to
increase the amount of so-called DUCs -- drilled-but-uncompleted
wells -- which means they will 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.
Write to Sarah McFarlane at sarah.mcfarlane@wsj.com
(END) Dow Jones Newswires
December 18, 2018 12:36 ET (17:36 GMT)
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