Oil prices stabilise after sharp slide
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https://www.ft.com/content/a1ca719a-0454-11e7-aa5b-6bb07f5c8e12
Oil prices stabilised on Thursday after falling by the most in more than a year over the previous session when US crude inventories climbed for the ninth straight week to a fresh high.
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Renewed concerns about a supply glut sent ripples through the currency market and hammered energy shares on Wednesday, but by Thursday in early European trade, Brent and West Texas Intermediate crude found support. The benchmarks were up 1.1 per cent to $53.69 and 0.8 per cent at $50.70 respectively.
During Wednesday’s heavy selling, WTI, the US crude marker, fell by as much as 5.8 per cent to $50.05 a barrel before settling at $50.28, while Brent crude slid 4.9 per cent to $53.10 a barrel, the lowest since November.
Since Opec and a group of large producer nations including Russia agreed a pact to cut production in late November, oil prices have moved in tightest range for more than decade.
Brent, the global oil marker has traded between $53 and $57 a barrel as the market has reacted to news of strong Opec compliance with the output-cut agreement and evidence that US shale production is starting to pick up.
“If things stay unchanged, then this week will be worst week for oil prices since the Opec deal,” said Olivier Jakob of Petromatrix, a Swis-based consultancy.
“If oil prices continue to slide then the risk increases that the weaker Opec nations (Iraq, Venezuela, Angola) start to export more oil to reduce diminishing revenues.”
Wedenesday’s slump came after the Energy Information Administration said that inventories of US crude stocks had climbed by 8.2m barrels, far more than analysts expected, as refinery oil purchases declined.
Fund managers dumped energy stocks in response to the price decline, with the S&P 500 energy sector falling 2.5 per cent, its steepest one-day drop since mid-September, taking its year-to-date losses to 8.5 per cent.
“The market has been facing two major headwinds — a continued supply overhang and an overhang of speculative length,” said Andy Lebow at Commodity Research Group. “Both factors came to the fore [on Wednesday]”.
