Crude futures recorded the steepest one day slide since Sept. 2015 as markets priced in US Donald Trump’s tweets that oil should be at levels trading lower than current. Supply side economics are such that the United States (US) has increased its output while the equity markets are signalling weakness in global growth. These factors totally offset the endeavours by OPEC nation Saudi Arabia to cut supply by 500,000bpd in December to provide support to crude prices.
U.S. crude futures (CLc1) settled down $4.24bbl, or 7.1%, to $55.69bbl. It was the largest one-day percentage decline for the contract since September 2015. U.S. crude has lost 28 percent since its early October peak.
Brent (LCOc1) ended down $4.65, or 6.6%, to $65.47bbl, the largest one-day loss since July. Brent has lost 25% since peaking at a four-year high in early October. It now sits at levels not seen since March.
In its monthly report, OPEC said world oil demand next year would rise by 1.29mn bpd, 70,000 bpd less than predicted last month and the fourth consecutive forecast cut.
Output, however, rose by 127,000 bpd to 32.9 million bpd, OPEC said.
Saudi Energy Minister Khalid al-Falih said earlier in the week that OPEC agreed there was a need to cut oil supply next year by around 1mn bpd from October levels to prevent oversupply.