Oil prices decreased during the week ending Dec. 14 amid weak world stock market and the fear of slow global economic growth.
The price of West Texas Intermediate (WTI) for January delivery decreased 2.7 percent, and Brent crude for January delivery decreased 2.3 percent.
In the previous week ending Dec. 7, WTI increased 3.3 percent, while Brent crude increased 5 percent. At the end of the week, WTI settled at 52.61 dollars a barrel, while Brent crude closed at 61.67 dollars a barrel.
On Monday, oil prices dived, erasing previous Friday's gains following an output cut deal between OPEC (Organization of the Petroleum Exporting Countries) and its allies. The global stock markets weakness spurred concerns over slowing global economic growth, driving oil prices to go down. WTI for January delivery decreased 1.61 U.S. dollars to settle at 51 dollars a barrel, while Brent crude for January delivery fell 1.7 dollars to close at 59.97 dollars a barrel.
U.S. stocks extended dramatic losses in intraday trading on Monday. The sharp fall came on the heels of the steep losses of the previous week. Analysts cautioned that the stock market slump would turn to undermine oil market, as the negative status quo stoked fears of a slower-than-expected global economy and a worsening demand outlook.
On Tuesday, oil prices extended gains as Russia plans to cut its oil production next month and Libya's national oil company declared forced shutdown. WTI for January delivery increased 0.65 U.S. dollar to settle at 51.65 dollars a barrel, while Brent crude for January delivery was up 0.23 dollar to close at 60.2 dollars a barrel.
Russia's Energy Minister Alexander Novak announced on Tuesday that the country would cut its oil output by at least 50,000 to 60,000 barrels per day (bpd) in January, which signaled that its production would be around 11.35 million bpd next month, slightly lower than 11.37 million bpd last month.
Further lifting oil prices, Libya's National Oil Company (NOC) declared on Monday a state of force majeure on exports from the country's biggest producer, the El Sharara oilfield as of Dec. 9, which was occupied by a militia group.
The supply outage would lead to a production loss of 315,000 bpd, and an additional loss of 73,000 bpd at the El Feel oilfield because of its dependence on El Sharara for electricity supply, NOC said in a statement.
On Wednesday, oil prices fell as global oil demand growth was expected to slow next year, OPEC said in its monthly report. WTI for January delivery decreased 0.5 U.S. dollar to settle at 51.15 dollars a barrel, while Brent crude for January delivery decreased 0.05 dollar to close at 60.15 dollars a barrel.
Looking ahead, the OPEC' s report noted that the upside for crude oil appeared "limited," because "rising trade tensions, monetary tightening and geopolitical challenges were among the issues that would skew economic risks even further to the downside in 2019."
Meanwhile, in its latest Short-Term Energy Outlook, U.S. Energy Information Administration (EIA) estimated that U.S. crude oil production averaged 11.5 million bpd in November, up 150,000 bpd from October levels because of platforms resuming normal operations after hurricane-related outages in October.
On Thursday, oil prices bounced as investors digested a batch of upbeat data showing lower global supply, which eased lingering concerns over supply surplus. WTI for January delivery rose by 1.43 U.S. dollars to settle at 52.58 dollars a barrel, while Brent crude for February delivery rose by 1.3 dollars to close at 61.45 dollars a barrel.
Global oil supply decreased 360,000 bpd month-on-month in November to 101.1 million bpd due to lower output in Canada, Russia and the North Sea, from which Brent crude is extracted, said the International Energy Agency (IEA) on Thursday in its latest Oil Market Report.
For non-OPEC supply, IEA has revised its growth forecast for 2019 down by 415,000 bpd, partly due to "expected cuts from Russia agreed last week, and to lower growth in Canada."
On Friday, oil prices plunged as signs of a potential weakening global economy increased market jitters with sharp falls in U.S. stock markets. WTI for January delivery fell 1.38 U.S. dollars to settle at 51.2 dollars a barrel, while Brent crude for February delivery fell 1.17 dollars to close at 60.28 dollars a barrel.
Concerns over excessive supply continued as global demand growth next year is expected to remain sluggish.
Oil market watchers have been closely monitoring the situation after oil inventory declined in the United States. Some investors began to expect that the global oil market could have a deficit sooner than they had previously thought.
Analysts said OPEC's output agreement with Russia and Canada's decision to mandate production cuts could create an oil market supply deficit by the second quarter of next year.
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