WTI Settles Down 11th Session

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Brent crude on the Intercontinental Exchange settled mixed. West Texas Intermediate ended down for an 11th consecutive session and at a nine-month low, reversing to the downside late in the session that coincided with a tweet from U.S. President Donald Trump.

"Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!" Trump tweeted at 1:21 p.m. EST, with WTI slipping below $60 per barrel (bbl) for the second time since March at the same time. The selloff in WTI futures intensified since the close.

Trump's tweet follows the Joint Ministerial Monitoring Committee meeting in Abu Dhabi on Sunday, with the committee overseeing the 2016 Vienna production agreement between members of the Organization of the Petroleum Exporting Countries, Russia and nine non-OPEC oil producers. In the lead up to OPEC's Dec. 6 biannual meeting, JMMC said a review shows an oversupplied market in 2019, and highlighted uncertainties that could affect the world economy and global oil demand.

JMMC directed the Joint Technical Committee to "further refine the scenario analysis [for] options on new 2019 production adjustments, which may require new strategies to balance the market."

Reports over the weekend indicate Saudi Arabia thinks the market will be oversupplied by 1.0 million barrels per day (bpd), and has said it would cut output by 500,000 bpd in December. The decline would come from a record high output rate for the Saudis at 10.7 million bpd.

Global oil demand is expected to decline by 1.2 million bpd from inherently strong demand during the fourth quarter to the cyclically weak first quarter, according to the International Energy Agency.

IEA will update their monthly outlook Wednesday morning, while OPEC will provide their short-term forecast Tuesday morning.

Oil futures have sold off sharply in the fourth quarter, with both WTI and Brent slipping into bear market territory last week amid bearish sentiment that continues to prompt long liquidation sales by speculators.

Key to the selloff was sharply higher world oil production from the world's three major oil producers -- the United States, Saudi Arabia and Russia, exacerbated by news the United States gave eight countries waivers from U.S. sanctions on Iranian oil exports. Surprisingly large upside revisions to U.S. oil production by the Energy Information Administration on Oct. 31 and again last week were another supply-side bearish shock, while demand projections are under review.

The U.S.-China trade war is seen having an adverse effect on China's economy and globally, while many uncertainties abound that helped trigger a massive selloff in equities, with the Dow Jones Industrial Average down 600 points late afternoon.

NYMEX December WTI futures settled down $0.26 at $59.93 bbl, its first settle below $60 bbl since March, and dropped more than $1 bbl since the closing bell. ICE January Brent settled at a fresh seven-month low at $70.12 bbl, with Brent joining WTI in bear territory on Friday. Brent futures were trading below $70 bbl late session.

NYMEX December ULSD futures settled at a 12-week low at $2.1556 gallon, down 1.72 cents despite below-normal inventory amid a slow start to the heating demand season. It was cold Monday in the Northeast, with below-normal temperatures forecast in the National Oceanic Atmospheric Administration's Climate Prediction Center through Nov. 21. Those readings moderate thereafter.

NYMEX December RBOB futures were the outlier, settling up 1.53 cents from a 13-month low to $1.6367 gallon. Since settlement however, RBOB futures are trading down.

Brian L. Milne can be reached at brian.milne@dtn.com

(CZ)

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