Underpinned by Stock Market Rebound, Increased Demand for Risky Assets

Ann Santiago
December 27, 2018

Shares of airliners flew up north on Wednesday, taking off smartly after crude oil prices slumped to their lowest levels in about eighteen months earlier this week.

In its latest Petroleum Administration for Defense District report, the Energy Information Administration said USA petroleum exports have increased over the past several years to become an important factor in global oil markets.

Investors globally anxious about economic slowdown amid higher US interest rates and the US-China trade dispute.

USA west crude futures fell $1.07, or 2.35 percent, to reach $44.52 a barrel, up from the lowest level since September 2017 at $44.41 a barrel. Today at 09:35 AM ET, the global benchmark had recovered slightly, rising 1.34 percent to US$51.45 a barrel, after shedding as much as 6.2 percent in the previous trading session to close at US$50.47 a barrel, Reuters reports.

At a press briefing in Kuwait, ministers from Iraq, the UAE and Algeria took turns repeating the message that Opec will deliver its output curbs and continue to work with its allies.

Investors remain skeptical of OPEC's promises to cut yields and are anxious about economic turmoil.

"What's happening in the stock market is raising fears that the economy is grinding to a halt and thereby will basically kill any future oil demand", said Phil Flynn, an analyst at Price Futures Group in Chicago.


US crude was up 74 cents at $43.27.

Stock-market gains, including a more-than-1,000-point gain for the Dow industrials DJIA, +4.98% and comments on improved stability for global supplies by Russia's top energy official, supported prices as markets resumed action. Russian Energy Minister Alexander Novak tried to reassure investors, saying the market will be more stable in the first half of 2019 due to the deal between Opec and its allies to cut output, and that producers will react if the situation changes.

Still, oil prices fell on Friday to their lowest since the third quarter of 2017 as global oversupply kept buyers away from the market ahead of holidays over the next two weeks.

"The planned cuts have been carefully studied, but if it doesn't work, we always have the option to hold an extraordinary OPEC meeting and we have done so in the past", Suhail Al Mazrouei, who is also OPEC president, said in Kuwait.

Brent rough LCOc1, the worldwide benchmark, was up 43 pennies at $50.90 at 0949 GMT.

OPEC and other major oil producers negotiated to cut oil production by nearly 1.2 million barrel a day, in the first week of December.

Other reports by

Discuss This Article

FOLLOW OUR NEWSPAPER