Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Oil slips after U.S. output hits a new record, stocks rise

Published 11/07/2018, 11:59 AM
Updated 11/07/2018, 11:59 AM
© Reuters. FILE PHOTO - Iraqi villagers sail past oil tanker southern Iraq.

By David Gaffen

NEW YORK (Reuters) - Oil prices fell on Wednesday, continuing their recent slide after surging U.S. crude output hit another record and domestic inventories rose more than expected.

In early trade, prices had risen after a report that Russia and Saudi Arabia are discussing whether to cut crude output next year. Then the U.S. Energy Information Administration reported that domestic crude inventories rose 5.8 million barrels in the latest week, more than double analysts' expectations.

Crude output hit 11.6 million bpd, a weekly record, though analysts will watch to see if monthly data confirms that.

U.S. crude futures (CLc1) fell 65 cents to $61.57 a barrel as of 11:17 a.m. EST (1617 GMT). That is down nearly 20 percent from a peak close of $76.41 a barrel in early October.

“The market has yet to prove that it can hold onto a rally, so the short-term mood is still very negative," said Phil Flynn, analyst at Price Futures Group in Chicago.

Brent crude (LCOc1), the global benchmark, fell 49 cents to $71.64 a barrel.

While Iranian oil exports are expected to fall after U.S. sanctions took effect on Monday, reports from OPEC and other forecasters have indicated the global oil market could have a surplus in 2019 as demand slows.

Russia and Saudi Arabia, the top producers in an OPEC-led alliance, started bilateral talks on a return to production cuts next year, Russia's TASS news agency reported, citing an unnamed source. In June, the producer group decided to relax output curbs in place since 2017, after pressure from U.S. President Donald Trump.

Analysts said those countries may be more willing to cut output now that the U.S. midterm elections are over. Trump, whose Republican party was fighting to retain control of congress, had complained of higher gasoline prices.

"OPEC was feeling the Trump pressure but producers took action with the thinking that they just needed to get past the U.S. election," said Joe McMonigle, analyst at Hedgeye in Washington, in a note Wednesday. "We expect to start hearing public comments from OPEC ministers this weekend" about pulling back on the recent production boost.

A ministerial committee composed of some members of the Organization of the Petroleum Exporting Countries and allies meets on Sunday in Abu Dhabi to discuss the outlook for 2019.

© Reuters. FILE PHOTO - Iraqi villagers sail past oil tanker southern Iraq.

Supply from countries such as Saudi Arabia has risen sharply since June. Also, Washington granted waivers from its sanctions on Iran to eight oil customers of that major supplier.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.