Oil prices decreased sharply during the week ending Dec. 21 amid weak world stock market and the fear of slow global economic growth.
The price of West Texas Intermediate (WTI) for February delivery decreased 11.0 percent, and Brent crude for February delivery decreased 10.7 percent.
In the previous week ending Dec. 14, WTI decreased 2.7 percent, and Brent crude decreased 2.3 percent. At the end of the week, WTI settled at 51.2 U.S. dollars a barrel, while Brent crude closed at 60.28 dollars a barrel.
On Monday, oil prices slumped as rising U.S. shale output and Cushing inventories deepened concerns over a global supply glut. WTI fell 1.32 dollars to settle at 49.88 dollars a barrel, while Brent crude was down 0.67 dollar to close at 59.61 dollars a barrel.
Moreover, oil output from seven major U.S. shale basins is projected to surge 134,000 barrels per day to 8.166 million barrels per day in January next year.
Adding to the worrying impact, oil stockpiles at Cushing, U.S. state of Oklahoma, a delivery hub for U.S. crude futures, rose over 1 million barrels between Dec. 11 and Dec. 14, exceeding investors' expectation.
Analysts said that the increased inventories have pulled the crude into a deeper bearish market.
On Tuesday, oil prices dived as mounting anxieties over supply surplus cast a pall over investors across the board. WTI plunged 3.64 dollars to settle at 46.24 dollars a barrel, while Brent crude slumped 3.35 dollars to close at 56.26 dollars a barrel.
Oil prices plunged more than 7 percent to the lowest level since August 2017, as global supply continued piling up amid sagging demand due to signs of slowing global growth.
Worsening the situation, investors' confidence was further retreating amid broad sell-off in U.S. stock markets.
On Wednesday, oil prices recovered wiping off some of the sharp losses on Tuesday, as U.S. stockpiles fell last week and Federal Reserves announced an interest rates hike for the fourth time this year. WTI rose 0.96 dollar to settle at 47.2 dollars a barrel, while Brent crude jumped up 0.98 dollar to close at 57.24 dollars a barrel.
Meanwhile, U.S. crude inventories dropped by 0.5 million barrels in the week ending Dec. 14, marking the third weekly drop in a row, according to a weekly report released by the U.S. Energy Information Administration (EIA) on Wednesday.
U.S. crude oil imports averaged 7.4 million barrels per day in the week, up by 30,000 barrels per day from the previous week ending Dec. 7.
On Thursday, oil prices dived into a 17-month trough as fears over a slack market stuck in oversupply and weaker demand intensified after the stock market took a harsh beating. WTI fell 1.32 dollars to settle at 45.88 dollars a barrel, while Brent crude tumbled 2.89 dollar to close at 54.35 dollars a barrel.
Both WTI and Brent futures have erased over 35 percent gains from their October highs, weighed by a steep sell-off in the stock market.
Shrinking U.S. crude stockpiles and a daily 1.2 million-barrel output cut deal reached by OPEC and its allies have played a limited role in reversing falling price, as it takes time for investors to observe how the supply and demand sides will develop.
On Friday, oil prices extended losses, sinking further to a record low since January 2016, as worries of oversupply and diminishing demand due to a potential slowdown in global growth were aggravated. WTI fell 0.29 dollar to settle at 45.59 dollars a barrel, while Brent crude fell 0.53 dollar to close at 53.82 dollars a barrel.
The gloomy sentiment among oil traders came along with a continuing sell-off in the stock markets, as investors held a bearish outlook on economic growth in the coming year.
Meanwhile, according to the weekly data released by Baker Hughes on Friday, the number of active drilling rigs in the United States increased by nine to 1,080 in the week ending Dec. 21, and the number of rigs operating in U.S. oil fields increased by 10 to 883 rigs.
Crude oil benchmarks dropped more than 10 percent for the week, causing concerns among the global buyers. Oil market watchers have been closely monitoring the situation as investors fret about the strength of the global economy heading into next year.
In the meantime, the market will wait to see the impacts of the daily 1.2 million barrel output cut deal between OPEC and its allies, which will not kick in until next month.
Latest comments