Breaking News
0

Oil Breaks Below $60 as Bears Maul Market; OPEC Showdown Next

CommoditiesNov 09, 2018 02:52PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Oil prices break $60 support.

Investing.com - The oil bears vs. OPEC showdown is coming down to the wire. And across crude markets the question almost everyone seems to be asking is: can oil prices go any lower?

On Friday, the world's leading crude benchmarks fell below key support levels they've held for the past seven months at least. U.S. West Texas Intermediate fell under the $60 per barrel support it had maintained since March and and U.K. Brent fell below the $70 level it had latched on to since April.

While both were technically in bear markets -- having lost more than 20% of their value from four-year highs hit in early October -- WTI also showed a year-to-date loss of nearly 0.5% vs. a gain of 27% just five weeks ago. Brent is still up about 4% or more on the year, although there is no telling what could happen if the selloff in oil, now into its 10th day and one of the biggest consecutive slides since the 1980s, continues.

"The collapse in oil prices has turned into a total bear bath," said Phil Flynn, analyst at Chicago's Price Futures Group. "The market ignores the bullish fundamentals and only focuses on bearish things that are yet to come."

WTI settled down 48 cents, or 0.8%, at $60.19 per barrel, plumbing a 9-month low of $59.27 earlier. On Oct. 3, just before the dramatic flip in oil prices, it had hit nearly $77.

Brent was off 44 cents, or 0.6%, at $70.21 per barrel by 2:45 PM ET (19:45 GMT), after hitting a 7-month low at $69.15 earlier. Brent's peak in early October was nearly $87.

The party most aggrieved by the oil selloff has to be OPEC. Few of its members would have imagined just weeks ago that prices of crude (which basically determine their national revenue) at these levels, especially with the U.S.-imposed sanctions on Iran, OPEC's third-largest exporter.

Instead of the supply squeeze OPEC had hoped for post-Iranian sanctions, the market has bet on oversupply, thanks to generous waivers granted by the Trump administration on the sanctions. Adding to the bearish sentiment was data this week showing U.S. weekly crude production at a record high of 11.6 million barrels per day. And if those weren't enough, industry data on Friday showed U.S. energy firms adding 12 oil rigs this week, the fourth increase in five weeks that brought drilling to over 3-year highs.

OPEC Cuts, Yes; But OPEC Break-Up?

A Joint OPEC and Non-OPEC Ministerial Monitoring Committee, which includes Russia, will be meeting this weekend in Abu Dhabi and talk is rife that the group will be cutting production.

Even if the weekend meeting doesn't yield results, there will be an OPEC conference in Vienna on Dec. 6, where production quotas are usually finalized. Analysts are almost certain OPEC will intervene to prop the market up by then.

OPEC's last round of cuts began in January 2017 when oil prices sank in aftermath of the 2014-originated global supply glut that drove WTI down to nearly $25 a barrel. While the cuts were supposed to last until the end of 2018, the group ended them when prices began rallying sharply this year.

But even with talk of new cuts making their rounds, The Wall Street Journal reported on Friday that a Saudi government-funded think tank was studying the possible effects on oil markets of a breakup of OPEC, a remarkable research effort for a country that has dominated the cartel for nearly 60 years.

The effort coincides with new pressures on the Saudi government, including from the U.S., where President Donald Trump has accused OPEC of pushing up oil prices, and from investors who distanced themselves from the kingdom after the brutal killing of U.S.-based Saudi journalist Jamal Khashoggi, the Journal added.

Oil Breaks Below $60 as Bears Maul Market; OPEC Showdown Next
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
ian hawksworth
ian hawksworth Nov 10, 2018 2:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This is a political move by the trump administration. Impose possible sanctions on Irain. Then suddenly give waivers to the biggest oil consumers in the world..While over oil producer’s including USA (who has now become the biggest oil producer in the world this week) where pumping like crazy to make up the short fall. This then brings the price crashing down as he wanted. High oil means a slowing economy.
Reply
1 0
Jack Mayoffer
Jack Mayoffer Nov 09, 2018 12:56PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Rally?? What happened to $100. You were reporting a little while back
Reply
0 0
Barani Krishnan
Barani Krishnan Nov 09, 2018 12:56PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
$100 oil was speculated BY THE WHOLE WORLD just weeks ago, not just Investing.com.. . That essentially is the dramatic U-turn we've seen in this market.. . Stay with us for the hair-raising bends ahead.
Reply
0 0
Vorlon Firstone
Vorlon Firstone Nov 09, 2018 12:56PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
So you are essentially saying that if you predict a rally it will go south, right?
Reply
0 0
Barani Krishnan
Barani Krishnan Nov 09, 2018 12:56PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Tell that to Goldman Sachs and the rest of the brainiest chaps you have in the oil market.We are just reporting their views -- and the price action, of course.
Reply
0 0
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email