Oil sinks 7% into bear market on oversupply fears

Oil sinks 7% into bear market on oversupply fears

Oil sinks 7% into bear market on oversupply fears

Yawger noted that the potential pullback in Saudi output has in part already been made up by the sharp bump in US production, which reached 11.6 million bpd in the most recent week, a new record.

Brent dropped $4.03, or 5.8 per cent, to $66.09 a barrel.

Demand for its crude will be about 31.5 million bpd, which is 500,000 bpd less than its forecast two months ago and 1.4 million bpd below current output, Opec said this week.

The Indian market too welcomed the fall in worldwide oil prices and opened higher today. Russian Federation and Saudi Arabia are also pumping crude at record levels.

With this type of trend, falling stock prices cause investor confidence to plummet right along with the oil prices. America's increasing inventories suggests "the nation's crude exports could become more active, resulting in excess global supplies".

Opec now expects world demand to grow 1.29m barrels a day next year, about 70,000 barrels a day lower than last month's forecast.

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It added: "Non-OPEC oil supply growth in 2018 is estimated at 2.31 mb/d, an upward revision of 0.09 mb/d from the previous month's assessment".

Even as the Saudis floated the possibility of a cut in production, the selling has not abated.

Much of this oil was ordered ahead of US sanctions against Iran that were imposed this month, as refiners prepared for a sudden drop in supply.

"It's been a ideal storm for oil as of late, with lower global growth expectations, higher output from the US, Russia and Saudi Arabia, waivers on Iranian sanctions and general risk aversion in the markets sending Brent and WTI rapidly into bear market territory", Craig Erlam, a senior market analyst at Oanda, said on Wednesday. It may well be the case that Moscow is not opposed to lower oil prices-as it has indicated earlier as well-as they would eventually come to bite into US shale drillers' performance. The persistent has also been linked to the growing concerns and warnings from the IEA and OPEC over a supply glut, heading into 2019.

Oil prices posted the deepest plunge in more than three years in the worldwide market. During the week-ending November 2, the API reported that US crude stocks climbed by 7.8 million barrels.

The State Department's zigzag on Iran sanctions, President Donald Trump's tweets about OPEC supply, the demand-sapping trade war with China and the explosion of shale oil production are all key factors leading to the collapse in crude prices since early October, Ed Morse, head of commodities research at Citigroup Inc., said in a phone interview. Vagit Alekperov, CEO at Russia's second-biggest oil producer Lukoil, said this week that he doesn't see any need of cuts in 2019.

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