Oil sinks 7% into bear market on oversupply fears

Representatives from here major oil producers met in Abu Dhabi at the weekend

Representatives from here major oil producers met in Abu Dhabi at the weekend

"Hopefully, Saudi Arabia and OPEC will not be cutting oil production". That would represent a growth rate of 2.23 million bpd for 2019 from 2018, an upward revision by a considerable 120,000 bpd from OPEC's October Monthly Oil Market Report.

ICE Brent crude in London settled below its lower Bollinger Band this week after breaching a key 50 percent Fibonacci retracement support level in early November.

Oil's fall accelerated on Tuesday, with United States futures dropping to lows not seen in 11 months due to ongoing worries about weakening global demand, oversupply and selloffs across other asset classes, including equities.

THE price of crude oil, which has been falling in the past three weeks, further dropped from $71 per barrel to $69 per barrel, yesterday as the Organisation of Petroleum Exporting Countries, OPEC, predicted oil demand growth to increase by 1.50 mb/d y-o-y, a downward revision from the previous month of 40 tb/d, mainly due to weaker-than-expected oil demand data from the Middle East and, to a lesser extent, China during 3Q18.

The comments from the minister, Khalid al-Falih, show the balancing act the USA allies face in dealing with President Donald Trump's actions related to the oil industry.

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Both benchmarks have fallen more than 20 percent since peaking at four-year highs in early October. Oil, which closed at $60.42 in 2017, is now lower for the year. He said there was now an oversupply of oil, leading to plummeting prices, and that the kingdom would curb its output to stabilize the market.

Oil's record losing streak has plunged prices into a bear market and is reverberating around the globe, with the mayhem rattling everyone from bond traders to political leaders and fund managers. That came after reports that Saudi Arabia was considering a production cut at the December OPEC meeting, on increased alarm that supply has started to outpace consumption. "Oil prices should be much lower based on supply", Trump tweeted. In July, Trump called the organization a "monopoly", warning on Twitter that "gas prices are up & they are doing little to help".

Investors should also keep an eye on shale fields in the US, where drillers have continued to increase the number of drilling rigs. Kazakhstan said on Tuesday its oil output rose 4.8 per cent to 74.5 million tonnes in the first 10 months of 2018, equivalent to 1.82 million bpd.

Most analysts expect US output to climb above 12 million bpd within the first half of 2019.

Even as the demand-supply imbalance hurts prices, President Donald Trump fired another salvo in a Monday tweet.

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