Petrol Prices Hit 2018 Lows, Diesel Rates At Lowest Since March

Anna Jefferson
December 27, 2018

The head of Russian oil company Rosneft, Igor Sechin, predicted an oil price of $50-$53 in 2019, a long way south of the four-year high of $86 for Brent crude reached earlier this year.

At the same time, the growth in non-OPEC supply appears to have stalled as updates from the U.S. Energy Information Administration (EIA) show production holding steady at 10,600K in the week ending December 14, and signs of slowing output may foster a near-term correction in crude especially as the International Energy Agency (IEA) warns that the economic slowdown in Venezuela paired with the sanctions on Iran may lead to unintended consequences that would exacerbate the drop in global output.

OPEC hasn't even started implementing its new six-month agreement to cut output, and already members responsible for most of the reductions have pledged to extend or even deepen it. Asian securities exchanges withdrew again on Wednesday. The U.A.E.'s energy minister, while stressing that the 1.2-million barrel-a-day cut will clear an inventory buildup in the first half, hinted additional curbs could be discussed.

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The macroeconomy and its impact on oil demand continue to put pressure on prices.

The US-China trade dispute and the prospect of a rapid rise in US interest rates have brought global stocks down from this year's record highs and ignited concern that oil demand will be insufficient to soak up any excess supply.

In wider financial markets, investors were still anxious as the S&P 500 Index of equities stands just seven points away from completing a full-blown bear market drop.

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"I think there is a smidgen of over-expansion to the drawback connected to worldwide market fears", said Olivier Jakob, examiner at Petromatrix.

"There are several bearish factors in oil markets, and the situation won't improve anytime soon".

WTI for February delivery was 25 cents higher at $42.78 a barrel on the New York Mercantile Exchange. The benchmark Brent crude traded below $54 a barrel, the lowest since September 2017. The U.S. benchmark on Monday finished at the lowest for a front-month contract since July 21, 2017, and remains down roughly 9.25% so far this month, according to Dow Jones Market Data.

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Brent fell 11 per cent last week and hit its lowest since September 2017, while United States futures slid to their lowest since July 2017, bringing the decline in the two contracts to 35 per cent so far this quarter.

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