Oil extends 7% slump from previous day

The surge in US production is contributing to rising global stockpiles. (Reuters)
Updated 14 November 2018
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Oil extends 7% slump from previous day

  • Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown
  • OPEC has been making increasingly frequent public statements that it would start withholding crude in 2019

SINGAPORE: Oil markets slipped again on Wednesday, extending losses from a 7 percent plunge the previous session as surging supply and the specter of faltering demand scared off investors.
US West Texas Intermediate (WTI) crude oil futures were at $55.50 per barrel at 0514 GMT, down 19 cents from their last settlement.
International benchmark Brent crude oil futures were down 22 cents at $65.25 per barrel.
Crude oil has lost over a quarter of its value since early October in what has become one of the biggest declines since prices collapsed in 2014.
The slump in spot prices has turned the entire forward curve for crude oil upside down.
Spot prices in September were significantly higher than those for later delivery, a structure known as backwardation that implies a tight market as it is unattractive to put oil into storage.
By mid-November, the curve had flipped into contango, when crude prices for immediate delivery are cheaper than those for later dispatch. That implies an oversupplied market as it makes it attractive to store oil for later sale.
Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown.
US crude oil output from its seven major shale basins is expected to hit a record of 7.94 million barrels per day (bpd) in December, the US Department of Energy’s Energy Information Administration (EIA) said on Tuesday.
That surge in onshore output has helped overall US crude production hit a record 11.6 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.
Most analysts expect US output to climb above 12 million bpd within the first half of 2019.
“This will, in our view, cap any upside above $85 per barrel (for oil prices),” said Jon Andersson, head of commodities at Vontobel Asset Management.
The surge in US production is contributing to rising stockpiles.
US crude stocks climbed by 7.8 million barrels in the week ending Nov. 2 to 432 million as refineries cut output, data from industry group the American Petroleum Institute showed on Tuesday.
The producer group Organization of the Petroleum Exporting Countries (OPEC) has been watching the jump in supply and price slump with concern.
OPEC has been making increasingly frequent public statements that it would start withholding crude in 2019 to tighten supply and prop up prices.
“OPEC and Russia are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next OPEC meeting on Dec. 6,” said Andersson.
That puts OPEC on a collision course with US President Donald Trump, who publicly supports low oil prices and who has called on OPEC not to cut production.


Jet Airways now operating only 41 aircraft, could reduce further: regulator

The debt-laden carrier has delayed payments to banks, suppliers, pilots and lessors. (Reuters)
Updated 19 March 2019
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Jet Airways now operating only 41 aircraft, could reduce further: regulator

  • Jet Airways may reduce the number of aircraft it is flying in coming weeks
  • The debt-laden carrier has delayed payments to banks, suppliers, pilots and lessors
NEW DELHI: India’s aviation regulator said on Tuesday that Jet Airways is currently operating only 41 aircraft, just a third of its original fleet, as the debt-laden carrier struggles to finalize a rescue deal with lenders and its major shareholder Etihad Airways.
The Directorate General of Civil Aviation (DGCA) said in a statement the situation is fluid and that Jet may reduce the number of aircraft it is flying in coming weeks.
Saddled with debt of more than one billion dollars, Jet has delayed payments to banks, suppliers, pilots and lessors — some of whom have ended lease deals with the airline before taking the planes out of the country.
The DGCA also said that pilots, cabin crew and ground staff who have reported any kind of stress should not be put on duty, and the airline should carry out regular maintenance of its aircraft even if they are currently grounded.