Oil Tumbles Along With Equities as Market Weighs Glut Outlook
Oil fell after a four-day run of gains, pressured by declines in wider markets and a backdrop of oversupply.
Brent for January delivery traded near $64 a barrel. A global stock rally hit a speed bump, with US equity futures and markets in Asia and Europe sliding lower on Tuesday, while the dollar climbed, weighing on crude.
The Organization of the Petroleum Exporting Countries and its allies said over the weekend they planned to hold back from lifting production quotas in the first quarter. The decision came ahead of a widely expected glut.
“Asian and US manufacturing activity keeps contracting, raising fears of demand headwinds,” analysts at brokerage PVM wrote in a report. “A strong dollar does not help either.”
The global benchmark has retreated 14% this year as OPEC+ and nations outside the group ramped up production. Prices rebounded from five-month lows when the US recently announced sanctions on Rosneft PJSC and Lukoil PJSC, Russia’s two biggest oil companies, but have given back part of the gains since.
Torbjörn Törnqvist, chief executive officer of major oil trader Gunvor Group, is skeptical the restrictions will stop Russian oil from finding buyers.
“Down the line, you will see that more and more of the disrupted Russian oil, one way or another, finds its way to the market,” Törnqvist said in an interview on Tuesday. “It always does somehow.”
Eni SpA Chief Executive Officer Claudio Descalzi, on the other hand, said on Monday that any concerns on oversupply will be short-lived — the latest industry leader to attempt to soothe worries about weak demand.
At the same time, the heads of several oil majors warned that the market wasn’t taking the impact of US curbs on Russian oil producers seriously enough.
Brent for January settlement fell 1.4%% to $64.01 a barrel as of 8:43 a.m. in New York. WTI for December delivery slipped 1.5%% to $60.11 a barrel.
Source : Bloomberg.com
