Oil’s unprecedented decline deepened as investors fled a market hammered by swelling excess supplies, a darkening demand outlook and U.S. President Donald Trump’s Twitter critique of the world’s biggest crude exporter.
Futures plunged 7.1 percent in New York on Tuesday for the biggest one-day drop in three years. OPEC’s dire forecast for 2019 demand came at a time of steadily rising American production and stockpiles. Trump admonished Saudi Arabia for planning to curb output and lamented prices that settled below $56 a barrel for the first time in a year.
“This tweet certainly did not help prices,” said Warren Patterson, a senior commodities strategist at ING Bank NV. “Given the growing global surplus over the first half of 2019, OPEC will likely try to ignore President Trump’s call as much as possible.”
West Texas Intermediate futures have fallen for a record 12 sessions on fears that a supply glut similar to the price-killing surplus of 2014 is redeveloping. In London, Brent futures have declined in 11 of the past 12 sessions. Money managers’ combined bullish positions in WTI and Brent sank to the lowest in 14 months as of Nov. 6, Commodity Futures Trading Commission data show, as long positions shrank and shorts increased.
“Today’s move is just capitulation,” said Nick Gentile, managing partner of commodity trading advisor NickJen Capital Management & Consulting LLC in New York. Traders who analyze chart trends to divine future price moves are “adding to the shorts” while so-called macro traders are “liquidating longs.”
WTI for December delivery dropped $4.24 to end the session at $55.69 a barrel on the New York Mercantile Exchange. Total volume traded Tuesday was about 90 percent above the 100-day average.
Brent for January settlement closed down $4.65 at $65.47 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.63 premium to WTI for the same month.