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Oil Futures Tumble on 10th Straight US Supply Increase

November 28, 2018 at 16:17 by Andrew Moran

Oil futures are extending their losses midweek after the US government reported the 10th consecutive weekly increase in domestic inventories. Crude prices have experienced a lot of volatility in recent weeks, erasing their 2018 gains and sending year-to-date numbers in the red. With geopolitical tensions thrown in the mix, the energy commodity could have an interesting end to 2018 and a compelling start to 2019.

January West Texas Intermediate (WTI) crude oil futures fell $0.35, or 0.68%, to $50.87 per barrel at 15:40 GMT on Wednesday on the New York Mercantile Exchange. So far this year, oil has crashed about 12%, shedding much of its value since the peak in October.

Brent, the international benchmark for oil prices, is in the red, too. January Brent crude futures declined $0.56, or 1.05%, to $59.58 a barrel on London’s ICE Futures exchange. Brent has also eliminated its 2018 gains, falling roughly 5% this year.

According to the US Energy Information Administration (EIA), domestic crude stockpiles surged by 3.6 million barrels for the week ending November 23, beating market forecasts of a 430,000-barrel decline. Gasoline inventories slipped by 800,000 barrels, while distillate supplies increased by 2.6 million barrels.

The US Baker Hughes oil rig count totaled 885, down from 888 last week.

Crude prices had experienced a bump earlier this week on reports of a meeting between Russia and Saudi Arabia. Analysts observe that there might be an agreement to slash output prior to next month’s Organization of the Petroleum Exporting Countries (OPEC) meeting. Industry experts say that a supply cut is necessary to rebalance the global oil market in 2019 and prevent inventories from rising any further.

The losses mounted on a strengthening US dollar, which climbed 0.08% to 97.46. A stronger buck is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.

Overall, the recent slump is on par with the 2008 drop and the 2014–2015 crash.

In other energy markets, January natural gas futures soared $0.23, or 5.11%, to $4.43 per million British thermal units (BTU), January gasoline futures slid $0.01, or 0.76%, to $1.39 a gallon. January heating oil futures dropped $0.03, or 1.51%, to $1.85 per gallon.

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