NEW YORK (Reuters) – Crude oil refineries accelerated on Tuesday, while US futures dropped to low levels in 11 months due to ongoing concerns over weakening global demand, excessive supply and sales through other asset classes, including proprietary business.
PHOTO PHOTO: General view of the drilling platform, the first of the four oil platforms to be installed on the Norwegian gigantic land mine Johan Sverdrup during the development of the first phase, near Stord, western Norway on September 4, 2017. REUTERS / Nerijus Adomaitis / File Photo
Contracts in the United States were on their way to shut down at a record 12th regular session, while on Tuesday it was sold the worst. More than 830,000 contracts have changed at 1:45 in the morning. EST (1845 GMT), given that the assets reduced the positions of oil derivatives to the level of December 2017.
"It's like running at a bank," said Phil Flinn, an analyst at Price Futures Group in Chicago. "It comes to a point when it no longer looks about the basics, but about the total price collapse."
Oil prices were hit on Monday after US President Donald Trump put pressure on the Organization of Oil Exporting Countries not to reduce supplies to support the market. This came after reports that Saudi Arabia is considering cutting production at the December OPEC meeting on an increased alarm that supply has begun to exceed consumption.
"Twelve days in a row is crazy – but a lot of pieces are putting pressure on the market," said Bob Iavger, director of the energy future in Mizuho.
He said that the worrying concerns were due to weak global demand, US production growth, and speculation that quickly emerged from long positions were the primary factors behind the decline.
US crude future CLc1 lost $ 3.59 or 6 percent, which is $ 56.35 per barrel, the lowest since December 2017, from 1:45 p.m. EST (1845 GMT), putting it in the direction of the largest one-day loss since January 2016.
Brent LCOc1 dropped 4.03 dollars or 5.8 percent to 66.09 dollars for barrel.
Both criteria fell more than 20 percent since the beginning of the high level in early October.
In its monthly report, OPEC said world oil demand will increase by 1.29 million barrels a day next year, 70,000 bpd less than anticipated last month and the fourth consecutive reduction in the forecast. Production, however, grew by 127,000 bpd to 32.9 million bpd, according to OPEC.
"OPEC has reduced the demand forecast, and this gives them a cover to reduce production," Flinn said.
Saudi Energy Minister Kalid al-Falih said on Monday that OPEC agreed that there is a need to reduce oil supplies next year by about 1 million barrels per day (bpd) from the October level to prevent over-supply.
Even when the Saudis floated the possibility of reducing production, sales did not decrease.
Mizuho's Iavger noted that the potential withdrawal in Saudi production has partly already made a sharp decline in US production, which reached 11.6 million bpd in the last week, a new record. In addition, Russia has given mixed signals about the cut, and general director of Lukoil, Vagit Alekperov, said on Monday that he had not seen the reduction needed.
"They can not decide whether to reduce or not," said Javger. "These strange bedfells no longer look like they're in the same bed anymore."
Trump said on Monday that he hopes that OPEC will not reduce production, which is clear that it wants oil prices to fall.
A terrible fall came as speculators pulled back their heavy bets on oil. Hedge funds and other money managers have reduced their long position in oil contracts to the lowest level since August 2017 last week.
Reporting David Gaffen in New York; additional reports by Christopher Johns in LONDON and Henning Gloistein in SINGAPORE; Editing by Susan Thomas and Marguerite Choy