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Oil rises to $51 after steep slide; growth fears weigh

27 December, 2018, 06:38 | Author: Sara Gill
  • Oil slips back towards 18-month lows on oversupply

Unrefined has been made up for lost time in more extensive budgetary market shortcoming as the U.S. government shutdown, higher U.S. financing costs and the U.S. - China exchange question startled speculators and exacerbated stresses over worldwide development.

"But market confidence needs to be restored for oil price.that include an equity market rebound and/or a bigger production cut from major oil exporters", Yang said, referring to an OPEC-led agreement to lower output from next month.

The decline in prices prompted U.S. shale producers to cut back on their drilling plans for next year. Asian stock markets retreated again on Wednesday. That follows the United Arab Emirates energy minister's remarks signaling the producers could have an extraordinary Opec meeting and discuss additional curbs if needed.

USA crude benchmark West Texas Intermediate (WTI) was down 6.7 percent, settling at $42.53 a barrel.

At a press briefing in Kuwait, Iraqi, the U.A.E. and Algerian energy ministers took turns repeating the message that OPEC will deliver its 800,000 barrels per day cut and continue their cooperation with other producers to balance supply and demand.

At the same time, an ongoing trade war between the USA and China and the Federal Reserve's rate policy are causing concerns over global economic growth.

"I think there is a little bit of over-extension to the downside linked to global market fears".

Concerned that a new glut could form, OPEC and its allies including Russian Federation decided earlier this month to return to a policy of cutting production in 2019, unwinding a decision taken in June 018 to pump more oil. Bloomberg quoted a Rakuten Securities analyst as saying, "There are several bearish factors in oil markets, and the situation won't improve anytime soon".

West Texas Intermediate for February delivery fell $1.41 to $44.18 a barrel. The global benchmark crude traded at an $8.25 premium to WTI. The U.S. benchmark on Monday finished at the lowest for a front-month contract since July 21, 2017, and remains down roughly 9.25% so far this month, according to Dow Jones Market Data. They slumped 6.7% in the previous session to US$42.53 a barrel, the lowest since June 2017.

Brent for February settlement declined as much as 54 cents to $49.93 a barrel on the London-based ICE Futures Europe exchange, before paring losses to trade at $51.05 at 11:15 a.m.in London.



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