Global oil markets extended their longest losing streak on record Tuesday, with prices falling for the 12th consecutive session after President Donald Trump urged Saudi Arabia and other OPEC members not to cut production rates even as output in the United States reaches historic highs and questions over demand in a slowing world economy weigh on commodity market sentiment.
Trump tweeted fresh criticism for the world's biggest energy cartel, as well as Saudi Arabia, late Monday evening, just hours after the Kingdom said it would trim December exports by 500,000 barrels a day and a meeting of OPEC's monitoring committee hinted a extending production cuts into next year. The President's remarks added further downward pressure on oil prices, with U.S. crude falling to the lowest level of the year.
Brent crude contracts for January delivery, the global benchmark, fell 4.4% to $67.06 a barrel, while West Texas Intermediate crude contracts for December, which are more tightly liked to U.S gas prices, slumped 4.5% to $57.25 a barrel.
Bank of America Merrill Lynch's monthly survey of global fund managers noted that energy market allocation fell 7 percentage points to a 9% overweight in October, while a net 44% of the 225 panelists polled, who collectively control more than half a trillion in assets, expect global growth to decelerate in the next 12 months, the most since 2008.
Saudi Arabia's energy minister, Khalid al-Falih, told reporters in Abu Dhabi Sunday ahead of OPEC's Joint Ministerial Monitoring Committee meeting that the Kingdom would reduce exports and production by 500,000 barrels a day, an amount equal to around 0.5% of total global output, amid a "tapering off" in demand.
The cuts preceded a statement from the committee that suggested next month's full OPEC meeting, which will include allies such as Russia, could propose a 1 million barrel per day production cut in 2019 in order to address what some members see as a glut in supply following record U.S. production and waivers on the purchase of Iranian crude granted to by the State Department to key global customers.
American producers are now pumping a record 11.6 million barrels per day, according to the Energy Information Administration, and crude stockpiles have risen to the highest levels in seven months. Last week, the closely-watched count of domestic drilling installations from Baker Hughes showed that 12 new rigs were added in the week ending November 2, taking the total count to 886, the highest since March 2015.
The State Department's decision to offer waivers to several countries, including China, the world's biggest energy consumer, allowing them to buy Iranian crude for at least the next six months has also weighed on prices this week, even following data from Beijing that showed October imports rose to a record 9.61 million barrels per day last month.
Global demand is also starting to concern investors who have ridden the recent wave of oil market gains, with a slowdown in China clipping estimates for 2019 imports now that the economy slowed to a growth rate of 6.5% over the third quarter and fresh tariffs on $250 billion worth of China-made goods are set to slow exports to the United States over the coming months.
Last month, the International Energy Agency trimmed its forecast for 2019 demand growth to 1.36 million barrels per day, citing a "weaker economic outlook, trade concerns, higher oil prices" and said big production boosts from OPEC lead Saudi Arabia meant that the global market is "adequately supplied for now."