(Bloomberg) — Oil’s on track for its worst month in a decade on growing fears over a global supply glut that’s been exacerbated by American waivers to Iranian crude buyers.
Futures in New York are set to drop about 21 percent in November, falling for a second month. While Russia showed a willingness to join Saudi Arabia in curbing output, the outcome of an OPEC meeting in Vienna next week is still unclear as the group is under pressure from President Donald Trump to lower prices. Meanwhile, the specter of expanding U.S. crude stockpiles has also been haunting the market.
After reaching a four-year high in early October, crude has collapsed more than 30 percent, marking the worst crash since 2015. While oversupply concerns were fueled by American exemptions on sanctioned Iranian oil, a trade dispute between the U.S. and China has threatened to hurt demand. Oil has remained in an oversold territory this month, and seesawed near the $50 threshold this week — a key budgetary marker for shale drillers.
“While oil retreated on oversupply concerns and it’s still possible that it could teeter in the short term, prices will go higher in the mid- to long-term,” Lim Jaekyun, a commodities analyst at KB Securities Co., said by phone in Seoul. “There is optimism over OPEC’s supply cuts as well as slowing U.S. output as current prices could idle shale production.”
West Texas Intermediate for January delivery traded at $51.38 a barrel on the New York Mercantile Exchange, down 7 cents, at 8:06 a.m. in London. The contract gained 2.3 percent to close at $51.45 on Thursday. Total volume traded was 18 percent above the 100-day average.
Brent for January settlement, which expires Friday, added 7 cents to $59.58 a barrel on London’s ICE Futures Europe exchange. The contract is down about 21 percent this month. The global benchmark traded at an $8.19 premium to WTI. The more-active February contract rose 6 cents.
Earlier this week, Russian President Vladimir Putin said crude around $60 a barrel is “balanced and fair,” but also added that Moscow is ready to cooperate with its fellow producers. The comment seemed less definitive than the Saudis’ call for the Organization of Petroleum Exporting Countries and its allies to remove about 1 million barrels a day from the market.
Russian and Saudi officials are scheduled to meet in Moscow over the weekend, signaling that an agreement on production cuts is possible if a meeting between Putin and Crown Prince Mohammed bin Salman at the G-20 summit in Argentina goes well, said people briefed with the talks. Russia wants more predictability and “smooth price dynamics” in world crude markets, Deputy Foreign Minister Sergei Ryabkov said in Buenos Aires.
In America, nationwide oil inventories gained for a 10th week by 3.58 million barrels last week, according to the Energy information Administration. That’s the longest rising streak since November 2015.
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