Oil claws back some losses after 6-pct plunge, but outlook weak
* Global economy going through "very difficult time" -IEA
* Fearing a glut, OPEC pushes for supply cuts
* Brent curve has moved into contango: https://tmsnrt.rs/2Q7oKbO
* Oil price slump lead by U.S. crude: https://tmsnrt.rs/2QgdxWA
(Adds Goldman Sachs comment, updates prices)
By Henning Gloystein
SINGAPORE, Nov 21 (Reuters) - Oil prices on Wednesday
recovered some of the previous day's over 6 percent plunge,
lifted by a report of an unexpected decline in U.S. commercial
crude inventories as well as record Indian crude imports.
But investors remained on edge, with the International
Energy Agency (IEA) warning of unprecedented uncertainty in oil
markets due to a difficult economic environment and political
International Brent crude oil futures were at $63.35
per barrel at 0401 GMT, up 82 cents, or 1.3 percent from their
U.S. West Texas Intermediate (WTI) crude futures,
were up 78 cents, or 1.4 percent, at $54.21 a barrel.
Wednesday's rebound came after a report by the American
Petroleum Institute late on Tuesday that U.S. commercial crude
inventories last week fell unexpectedly by 1.5 million barrels,
to 439.2 million, in the week to Nov. 16.
Record crude imports by India of almost 5 million barrels
per day (bpd) also supported prices, traders said.
Yet Wednesday's bounce did little to reverse overall market
weakness, which saw crude tumble by more than 6 percent the
previous session amid a selloff in global stock markets.
"The global economy is still going through a very difficult
time and is very fragile," IEA chief Fatih Birol said on
U.S. investment bank Goldman Sachs said on Wednesday the
renewed price collapse reflected "concerns over excess supply in
2019... (and) a broader cross-commodity and cross-asset sell-off
as growth concerns continue to mount."
With output surging and the demand outlook deteriorating,
the Organization of the Petroleum Exporting Countries (OPEC) is
pushing for a supply cut of between 1 million and 1.4 million
bpd to prevent a repeat of the 2014 glut.
"We would anticipate further weakness until the reaction
from OPEC+ (Dec. 6) and the G20 summit is clearer (Nov. 30/Dec.
1)," said Ashley Kelty, oil analyst at investment bank Cantor
Despite an expectation of OPEC-led cuts, Brent and WTI
prices have slumped by 28 and 30 percent respectively since
early October, and the entire structure of the forward price
curve has changed.
The Brent forward curve was in steep backwardation
in October, implying a tight market with prices for spot
delivery higher than those for later dispatch. This makes it
unattractive to store oil.
Since then, however, the curve has moved into contango for
most of 2019, implying oversupply as higher prices further out
make it attractive to store oil for later sale.
Goldman said rising output and sluggish demand growth meant
there was "greater supply/spare capacity next year", but added
that it did not expect prices to match levels reached in early
2016 when crude slipped below $30 a barrel.
James Mick, energy portfolio manager with U.S. investment
firm Tortoise, said "part of the supply issue has been surging
U.S. crude oil production <C-OUT-T-EIA> has jumped by almost
a quarter this year, to a record 11.7 million bpd largely
because of a surge in shale output.
(Reporting by Henning Gloystein; Editing by Joseph Radford and
First Published: 2018-11-21 02:28:58
Updated 2018-11-21 06:02:40
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