SINGAPORE (Reuters) – U.S. oil prices fell 1 percent on Tuesday after slipping below $50 a barrel in the previous session, with reports of a big climb in U.S. inventories and forecasts of record shale output stoking worries about oversupply.
Pump jacks operate in an oil field in Midland, Texas U.S. August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford
Concerns around future oil demand amid weakening global economic growth and doubts on the impact of planned OPEC-led production cuts were also hurting prices, traders said.
U.S. West Texas Intermediate (WTI) crude futures were at $49.35 per barrel at 0035 GMT, down 1.06 percent, or 53 cents, from their last settlement.
U.S. crude prices have tumbled more than 35 percent since early October and are currently at levels not seen since October 2017.
International Brent crude oil futures had yet to trade.
“Crude oil prices were lower amid fears of weaker demand pushing inventories higher in the United States,” ANZ Bank said on Tuesday.
Oil production from seven major U.S. shale basins is expected to surpass 8 million barrels per day (bpd) by the end of the year, the U.S. Energy Information Administration said in a monthly report on Monday.
Inventories at the U.S. storage hub of Cushing, Oklahoma, rose by more than 1 million barrels from Dec. 11 to 14, traders said, citing data from market intelligence firm Genscape on Monday.
“Investors also remained concerned that OPEC will struggle to keep to its agreement to reduce output. This is likely to see prices remain under pressure until there is evidence that output is being cut,” ANZ Bank said in a note.
Supply curbs agreed by the Organization of the Petroleum Exporting Countries (OPEC) and its Russia-led allies might not bring about the desired results as U.S. output goes on increasing and as Iran keeps pumping out more oil, analysts said.
Fuelling those doubts, Russian oil output has been at a record-high of 11.42 million barrels per day (bpd) so far in December.
“There remains high suspicion as to what extent Russia will fill their commitment,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
“But enveloping supply concerns is the increasing likelihood of a protracted economic downturn in China that continues to stoke fears of demand slowdown,” Innes added.
China’s November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years as the economy lost further momentum.
Meanwhile, the U.S. Federal Reserve is widely expected to raise interest rates again at the end of its two-day meeting on Wednesday, impacting the dollar, which in turn may usher a major move in oil prices, analysts said.
Reporting by Koustav Samanta in Singapore; Editing by Joseph Radford