Crude oil prices head for lowest finish

Oil prices tumbled yesterday, with the United States (U.S.) benchmark heading for its lowest finish in over a year. Investors’ attention remains fixed on supply ahead of a key meeting of major oil producers early next month.

Global benchmark January Brent -5.69 per cent shed $2.85, or 4.3 per cent, to $63.94 a barrel, with prices looking at their lowest settlement since March.

Among the factors contributing to the steep decline, October U.S. petroleum inventory stands above the five-year average and the decline in Iranian oil exports has been less than anticipated, said James Williams, energy economist at WTRG Economics.

The market is also experiencing seasonally weak fall demand and hasn’t yet seen commitments by members of the Organisation of the Petroleum Exporting Countries (OPEC) to “strongly support a cut” when they meet on Dec. 6, he said.

“However, if the price is anywhere near today’s price on [Dec. 6], I expect OPEC to make cuts” to production, said Williams. “The lower the price, the higher the probability of a cut.”

Against that backdrop, January West Texas Intermediate crude CLF9, -5.52 per cent on its first full session as the front-month contract, dropped $2.87, or five per cent, to $54.33 a barrel on the New York Mercantile Exchange. A settlement around this level would be the lowest for a front-month contract since October 2017, according to FactSet data.