Oil Keeps Falling on Oversupply Concerns

Oil’s slide accelerated on Tuesday, with U.S. futures dropping to lows not seen in 11 months due to ongoing worries about weakening global demand, oversupply and sell-offs across other asset classes, including equities.

U.S. futures were on track to close lower for a record 12th straight session, with Tuesday’s selloff the worst yet. More than 830,000 contracts had changed hands as of 1:45 p.m. EST (1845 GMT), as funds shed positions with oil dropping to December 2017 lows.


West Texas Intermediate graph

“It’s like a run on the bank,” said Phil Flynn, analyst at Price Futures Group in Chicago. “It’s getting to the point where it doesn’t seem to be about fundamentals anymore, but a total collapse in price.”

Oil prices were hit on Monday after U.S. President Donald Trump put pressure on the Organization of the Petroleum Exporting Countries not to cut supply to prop up the market. That came after reports that Saudi Arabia was considering a production cut at the December OPEC meeting, on increased alarm that supply has started to outpace consumption.

“Twelve days in a row is insane – but there are a lot of pieces putting pressure on the market,” said Bob Yawger, director of energy futures at Mizuho.

Via Globe and Mail

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza