SINGAPORE: Oil prices remained on shaky ground on Tuesday after sliding by 3 percent the previous day, pressured by weakness in global stock markets and doubts that planned supply cuts led by producer club OPEC will be enough to rein in oversupply.
U.S. West Texas Intermediate (WTI) crude futures were at $51 per barrel at 0028 GMT, unchanged from their last close.
International Brent crude oil futures
Crude prices dropped by 3 percent the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts announced last week by the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia.
Crude prices are down around a third since early October amid the financial market slump and an emerging oil supply overhang.
"There remains a lot of uncertainty if the production cut is thick enough to make a significant dent in global supply," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
"The general risk-off tone in global markets and the stronger dollar ... are contributing to the selling pressure."
The OPEC-led group of oil producers last Friday announced a supply cut of 1.2 million barrels per day (bpd) in crude oil supply from January, measured against October 2018 output levels. - Reuters
Oil drops 3%, pares OPEC gains on stock market weakness
NEW YORK: Oil fell nearly 3 percent on Monday, echoing the weakness in global stock markets as the focus returned to concerns about growth in demand and crude prices erased some of the gains made last week on an OPEC-led decision to cut output.
A gauge of global equities stumbled on Monday, as losses in Europe and Asia extended to Wall Street on new signs the U.S.-China trade war was impacting world economic growth, but rebounded from an initial drop as Apple Inc
The market was also weighed down by confusion stemming from British Prime Minister Theresa May's postponement of a parliamentary vote on her Brexit deal and sluggish data from the world's largest economies including the U.S., China, Japan and Germany in recent days.
"The stock market and oil market correlation is back on today," said John Kilduff, a partner at Again Capital Management in New York. "These worries about the global economy and the demand outlook that follows on that for oil are a bigger and bigger negative for the market."
Brent crude oil futures settled down $1.70, or 2.76 percent at $59.97 a barrel. In post-settlement trading, Brent extended losses to a session low of $59.61. U.S. futures fell $1.61, or 3.06 percent, to $51.00 a barrel. In post-settlement trade, U.S. crude dropped to as low as $50.53 a barrel.
Prices had closed 3 percent higher on Friday after the Organization of the Petroleum Exporting Countries and some non-OPEC producers, including heavyweight Russia, said they would cut oil supply by 1.2 million barrels per day (bpd) from January.
"Friday’s agreement was a seemingly good one, or maybe we should say the best one under the current circumstances," Tamas Varga, a strategist with PVM Oil Associates, said.
"As good as it looks, our view is that it will not be able to provide long-term price supports because it could not help global oil inventories deplete."
Global equities <.MIWD00000PUS> have fallen by nearly 8 percent so far this year, battered by concern about slowing corporate earnings and the threat to the broader economy from the escalating trade war between the United States and China.
A steep increase in the pace of crude supply growth this year, especially in the world's three largest producers - the United States, Saudi Arabia and Russia - has made a number of analysts wary about the prospect of demand being sufficient to mop up extra oil.
"As usual, prices are not a target of OPEC+ policy, but our takeaway is that current price levels largely meet the interests of most participating countries," consultant JBC Energy said.
Edward Bell of Emirates NBD bank said "the scale of the cuts ... isn't enough to push the market back into deficit" and that he expected "a market surplus of around 1.2 million bpd in Q1 with the new production levels".
Oil prices have fallen sharply since October on signs of an economic slowdown, with Brent losing almost 30 percent in value.
Hedge funds and other money managers cut their bullish wagers on crude to the lowest in more than two years in the week ending Dec. 4, the U.S. Commodity Futures Trading Commission (CFTC) said on Monday.
The speculator group cut its combined futures and options position in New York and London by 25,619 contracts to 144,775 during the period. The level is the lowest since Sept. 20, 2016. - Reuters