Oil Prices Give Up Gains, WTI Tests $50 a Barrel amid Global Growth Risks
The price of oil turned lower on Monday in choppy trading characterized by heightened concern over global economic growth and supply/demand imbalances. So far, the market has failed to turn a corner following a decision by OPEC and its allies to trim crude production by 1.2 million barrels per day.
Crude Under Pressure
Following an early-morning rally, crude prices were back on the defensive Monday. The West Texas Intermediate (WTI) benchmark reached a low of $50.20 a barrel on the New York Mercantile Exchange after previously hitting a high of $51.87 a barrel. At the time of writing, WTI was down 61 cents, or 1.2%, at $50.59 a barrel.
Brent crude, the international futures benchmark, briefly traded below $60 a barrel, down from an intraday high of $61.21. It was last seen trading at $60.06 a barrel, down 22 cents, or 0.4%, from Friday’s close.
Oil prices were supported earlier in the session by a weakening U.S. dollar. The dollar index (DXY), which tracks the greenback’s performance against a basket of six peers, fell 0.3% to 97.19.
The oil-price collapse and concerns about the future have forced some of OPEC’s biggest producers to delay projects. On Monday, Kuwait’s Oil Minister Bakheet Al-Rashidi formally resigned from his post. According to Bloomberg News, two top executives at the state-run Kuwait Oil Co. have also stepped down.
Kuwait is the fifth-largest producer within the Organization of Petroleum Exporting Countries. Like Saudi Arabia, the vast majority of the public’s revenue come from the energy sector.
As Hacked previously reported, Qatar is planning to exit the 15-member producer group next year to focus on developing its natural gas industry.
Crude prices have also been pressured by rising stockpiles in the United States. Data from Genscape Inc. recently revealed an inventory build of 630,000 barrels in Cushing, Oklahoma, the nation’s biggest storage facility.
U.S. commercial crude inventories fell in the most recent week but have been trending higher throughout the fourth quarter. The American Petroleum Institute (API) is set to release its weekly inventory report Tuesday. The official data, courtesy of the U.S. Energy Information Administration (EIA) will be published Wednesday morning.
Rising stockpiles and a slowdown in global economic growth are expected to keep oil prices on the defensive for much of 2019. Chinese economic data on Friday confirmed a sharp slowdown in the world’s second-largest economy, a trend that has direct implications on the nation’s energy consumption.
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