WTI has wiped out all of its gains for 2018. The decline has been exacerbated by a U.S. decision to grant eight countries waivers to continue importing from Iran.
Futures in New York fell as much as 2.3 percent extending their losses to a 10th day. Prices are down more than 20 percent from a four-year high reached in early October. The drop comes two days before OPEC countries will meet with partners in Abu Dhabi, after signaling it may cut output again next year. Oil may get support as refiners return from seasonal, maintenance, boosting demand.
“I think refinery utilization rates are going to climb and when they do, that depletes crude inventories,” said Thomas Finlon, director of Energy Analytics Group LLC.
WTI has wiped out all of its gains for 2018. The decline has been exacerbated by a U.S. decision to grant eight countries waivers to continue importing from Iran, which it slapped with sanctions earlier this week. That decision, coupled with pledges by Saudi Arabia to pump more and gains in American supply, have turned fears of a supply crunch into talk of an oversupply.
“The focus is on negative sentiment in oil and negative momentum,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “It’ll be interesting to see if some stick with their shorts over the weekend with the OPEC meeting.”
West Texas Intermediate for December delivery fell 50 cents to $60.16 a barrel at 11:26 a.m. on the New York Mercantile Exchange. The contract is headed for about a 4 percent loss for the week and a fifth weekly decline. Total volume traded was 65 percent above the 100-day average. Brent futures for January settlement fell 62 cents to $70.03 a barrel on the London-based ICE Futures Europe exchange. Prices are also on course to fall for a fifth week. The global benchmark crude traded at a $9.72 premium to WTI for the same month.
A potential agreement by OPEC to return to output cuts would mark the second production U-turn for the group this year. For Saudi Arabia — the world’s biggest crude exporter — it would be the third time in recent years that the kingdom has delivered a supply surge only to quickly reverse it.
The decline comes after global oil supply has surged. U.S. crude production increased to a record 11.6 million barrels a day last week, according to Energy Information Administration data.
OPEC’s output in October reached the highest level since 2016, while Russia last month pumped 11.4 million barrels a day, a post-Soviet record. Producers meeting this weekend will have to contend with not only the threat of a glut, but also the risk to demand from faltering emerging-market economies and a trade war between the U.S. and China.