Daily Times

Oil prices fell more than 2 percent on Tuesday after US President Donald Trump put pressure on OPEC not to cut supply to prop up the market.

Brent dropped $1.97 a barrel, or 2.8 percent, to a low of $68.15 before recovering to around $68.52, down $1.60, by 1420 GMT. US light crude was $1.35 lower at $58.48.

Both crude benchmarks have fallen more than 20 percent since peaking at four-year highs in early October.

“The market now increasingly looks concerned about the prospect of too much supply,” said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer.

“Hedge funds and other speculative (investors) have swiftly changed from the long to the short side.”

Top crude exporter Saudi Arabia has watched with alarm how supply has started to outpace consumption, fearing a repeat of a glut that brought a price crash in 2014.

Saudi Energy Minister Khalid al-Falih said on Monday the Organization of the Petroleum Exporting Countries agreed there was a need to cut oil supply next year by around 1 million barrels per day (bpd) from October levels to prevent oversupply.

But Trump has made it clear he wants oil prices to fall.

“Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” the president said in a Twitter post on Monday.

That led to a sharp price drop on Monday and the sell-off continued into Tuesday.

“This tweet certainly did not help prices,” ING commodities strategist Warren Patterson said.

The dollar also put pressure on oil, hovering near 16-month highs, making crude more expensive for importers using other currencies.

Extraction from shale fields has propelled US oil production to record highs this year with crude output now at 11.6 million bpd, helping make the United States self-sufficient in energy.

Merrill Lynch says US crude production will break through 12 million bpd in 2019, supporting oil exports to the rest of the world.

Published in Daily Times, November 14^th 2018.