Crude futures rose ahead of settlement in choppy trade on Monday, supported by a reported drawdown of USA oil inventories, potential European Union sanctions on Iran and possible OPEC production cuts.
Fiona Cincotta, senior market analyst at City Index, said yesterday: 'Fears of slowing global growth are fuelling concerns over global demand, just at a time when Saudi Arabia, Russia and the U.S. continue to ramp up production'.
Oil prices on Wednesday recovered some of the previous day's over 6 per cent plunge, lifted by a report of an unexpected decline in U.S. commercial crude inventories as well as record Indian crude imports.
And sellers are not holding their breath - WTI is down nearly 6% today to its lowest since Nov 2017...
Brent crude futures fell US$4.26, or 6.4 per cent, to settle at US$62.53 a barrel. This is reality. Production is rising, led by increasing output from the United States, Russia and Saudi Arabia, which now accounts for about a third of USA daily consumption.
In other news, USA energy firms added two oil rigs in the week to November 16, bringing the total count to 888, the highest level since March 2015, according to energy services firm Baker Hughes.
Following a technical recovery that lasted for four days, crude oil prices came under a heavy selling pressure on Tuesday and the barrel of West Texas Intermediate plummeted to its lowest level since October 2017 at $52.75.
Russian Energy Minister Alexander Novak said today that Russia, which is not an OPEC member, was planning to sign a partnership agreement with the group.
Potential sanctions from the European Union would come as the United States has granted waivers to some of Iran's oil customers, muting the policy's expected impact on global supplies. "Given that inventories are still not too high, we believe oil prices should find some support from a fundamental perspective", BofAML wrote.
Both the WTI and Brent crude, the European benchmark, fell into a bear market earlier this month, plunging more than 20 percent from their peak last October.
Eight successive weeks of increases in USA crude inventories and data showing an increase in US oil rigs count are also hurting the commodity.
US crude oil inventories posted a drawdown of 1.545 million barrels in the week ending Friday, according to statistics released on Tuesday. "Crude oil output increased mostly in the UAE, Saudi Arabia, Libya and Angola, while production declined in IR Iran, Venezuela, Kuwait and Nigeria". The belief that OPEC may announce production cuts in a December 6 meeting in Vienna helped fuel gains at some points during the second half of last week. This has raised hopes that the two countries may agree on a deal when Trump and Chinese President Xi Jinping meet in Argentina later this month.