SINGAPORE (Reuters) – Oil struggled to find its base Wednesday after dropping seven percent to the previous session, with rising supply and a spectrum of unstable demand that avoided investors.
PHOTO PHOTO: Oil comes out of the source well from Edvard Drake's spring from 1859, which launched the modern petroleum industry at the Drake Well and the Titusville Museum in the US on October 5, 2017. REUTERS / Brendan McDermid / File Photo
FUTURE oil in Western Texas (VTI) was $ 55.52 for a barrel at 0732 GMT, down 17 cents or 0.3 percent from the latest settlement.
The international reference price of Brent crude oil LCOc1 was 9 cents lower and amounted to $ 65.38 per barrel.
Crude oil lost more than a quarter of its value since the beginning of October, which has become one of the biggest falls since the price collapse in 2014.
"Oil futures have succumbed to great pressure among … weaker market bases," said Benjamin Lu, an analyst at the brokerage house Phillip Futures in Singapore.
Reducing the price of the spots has turned the whole curve for crude oil upside down.
The prices of the spots in September were significantly higher than those for later delivery, a structure known as a downturn that implies a solid market because it is unattractive to put oil in the warehouse.
By mid-November, the curve went into contagion, when crude prices for immediate delivery were cheaper than those for later shipment. This implies an excessively used market, as it makes it attractive for the storage of oil for later sale.
Oil markets are under pressure from both sides: a supply surge and a growing concern over economic slowdowns, as seen in economic contracts in Japan and Germany during the third quarter, as well as in the decline in sales in China.
US crude oil production from the seven main basins in December is expected to record a record of 7.94 million barrels a day (bpd) in December, the US Energy Information Directorate (EIA) said on Tuesday.
This increase in production on land helped the total US production of C-OUT-T-EIA in record numbers of 11.6 million barrels, making the United States the world's largest oil producer ahead of Russia and Saudi Arabia.
Most analysts expect US production to rise above 12 million bpd in the first half of 2019.
"In our opinion, this will fall below $ 85 a barrel (for oil prices)," said Jon Andersson, product manager at Vontobel Asset Management.
US production growth contributes to an increase in inventories.
Data on official storage was scheduled for Wednesday by the Energy Information Administration, and analysts expect an increase of 3 million barrels of commercial raw stocks.
The cartel of the producers of the Organization of the Petroleum Exporting Countries (OPEC) monitors the supply jump and price reduction with concern.
OPEC has increasingly published a public statement that it will begin to deter crude in 2019 to boost bids and support prices.
"OPEC and Russia are under pressure to lower the current levels of production, which is the decision we expect at the next OPEC meeting on December 6," Andersson said.
This makes the OPEC collide with US President Donald Trump, who publicly supports low oil prices and who urged OPEC not to reduce production.
Reporting Henning Gloistein; Editing by Joseph Radford and Richard Pullin