Oil meltdown deepens as crude crashes below $51

Friday brought another round of dramatic price cuts in the oil patch.US oil prices...

Posted: Nov 23, 2018 4:06 PM

Friday brought another round of dramatic price cuts in the oil patch.

US oil prices plummeted as much as 7% and sank deeper into a bear market that has alarmed investors and made drivers around the world happy.

The latest wave of selling knocked crude below $51 a barrel for the first time since October 2017.

Anxiety about oversupply and diminished demand have sent crude down by a third since it soared to a four-year high above $76 a barrel in early October. Observers have gone from fearing $100 oil to expressing concern over why its price collapsed so quickly.

"The unrelenting six-week selloff has been unnerving to say the least," Michael Haigh, head of commodities research at Societe Generale, wrote to clients on Wednesday.

Oil bulls are hoping OPEC and Russia come to the rescue by announcing steep production cuts at a meeting next month in Vienna. However, President Donald Trump is pressuring Saudi Arabia and OPEC not to reduce output despite the crash in prices. Traders are worried Trump's recent praise for Saudi Arabia signals the Saudis won't back a significant production cut.

For the week, US oil prices are down nearly 10%.

Lukman Otunuga, research analyst at FXTM, described the weekly selloff as "brutally bearish."

Brent crude, the global benchmark, shed 5.5% on Friday and declined to a new 2018 low of $59 a barrel. Energy stocks led the way lower on Wall Street, contributing to a 178-point decline on the Dow. Chevron (CVX) and ConocoPhillips (COP) declined 3%, while shale producer EOG Resources (EOG) fell 5%.

The meltdown was triggered by a series of developments that darkened the energy outlook. Prices soared over the summer as Trump vowed to zero out Iran's oil exports. That led Saudi Arabia, Russia and especially the United States to ramp up production.

However, the Trump administration later took a softer approach on Iran sanctions to keep oil from spiking. Officials granted temporary waivers to China, India and other buyers of Iran's crude. That headfake left the oil market staring at a potential glut.

At the same time, global growth fears emerged in financial markets. Economists are marking down their GDP forecasts for 2019. Germany and Japan, the world's No. 3 and 4 economies, are already in contraction. China is slowing, too. None of that is bullish for oil, which powers the world economy.

"Rising global crude supply coupled with worrying signs of slowing demand have written a recipe for disaster for the oil markets," Otunuga wrote to clients on Friday.

The rapid collapse in oil prices caught many off guard, including hedge funds that made outsized bullish bets on crude earlier this year. Large commodity funds have accumulated losses in excess of $7.7 billion so far this quarter, Societe Generale estimates.

"Sentiment on commodity markets has been despondent," Haigh wrote.

The energy slump came at just the right time for consumers though. Millions of Thanksgiving travelers were greeted by cheaper prices at the pump. The average gallon of gallon fetched $2.58 on Friday, down sharply from $2.84 a month ago, according to AAA.

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 48201

Reported Deaths: 2693
CountyConfirmedDeaths
Marion11624683
Lake5146242
Elkhart328546
Allen2762129
St. Joseph194366
Cass16389
Hamilton1552101
Hendricks1403100
Johnson1278118
Porter72837
Tippecanoe7158
Madison65864
Clark65144
Bartholomew58544
Howard57557
LaPorte57326
Kosciusko5464
Vanderburgh5226
Marshall4924
Noble47828
Jackson4703
LaGrange4708
Hancock44835
Boone44243
Delaware44250
Shelby42525
Floyd37944
Morgan32931
Grant29426
Monroe29428
Montgomery29420
Clinton2892
Dubois2736
Henry26315
White26310
Decatur25032
Lawrence24425
Dearborn23623
Vigo2348
Warrick21429
Harrison21322
Unassigned193193
Greene18832
Miami1822
Jennings17611
Putnam1698
DeKalb1624
Scott1607
Daviess14317
Wayne1386
Orange13623
Steuben1292
Perry1279
Franklin1248
Jasper1212
Ripley1167
Wabash1122
Carroll1102
Fayette997
Newton9810
Starke933
Whitley925
Huntington812
Gibson802
Randolph794
Jefferson722
Wells721
Fulton701
Jay680
Washington671
Knox640
Pulaski641
Clay604
Rush583
Adams501
Benton480
Owen471
Sullivan441
Brown391
Posey390
Spencer381
Blackford372
Crawford320
Tipton321
Fountain312
Switzerland270
Parke230
Martin220
Ohio170
Vermillion140
Warren141
Union130
Pike110

Ohio Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 57150

Reported Deaths: 2911
CountyConfirmedDeaths
Franklin10271422
Cuyahoga7724373
Hamilton5924197
Marion273238
Lucas2723302
Pickaway219141
Summit2131206
Montgomery198126
Mahoning1825232
Butler157644
Columbiana130360
Stark1107112
Lorain102167
Trumbull93965
Warren83921
Clark7659
Delaware56815
Fairfield55916
Tuscarawas55210
Belmont54622
Medina51632
Lake49718
Licking47712
Miami46331
Portage44058
Ashtabula43344
Wood42151
Geauga40542
Clermont4006
Wayne36251
Richland3375
Allen31540
Mercer2818
Greene2519
Darke24825
Erie24222
Holmes2313
Huron2152
Madison1958
Ottawa14323
Crawford1355
Sandusky13414
Washington13220
Putnam12815
Ross1243
Hardin12312
Morrow1161
Auglaize1064
Coshocton972
Monroe8917
Jefferson872
Union851
Muskingum831
Hancock781
Hocking788
Preble731
Guernsey703
Lawrence700
Williams702
Clinton680
Shelby684
Logan621
Fulton610
Ashland591
Carroll593
Wyandot586
Athens561
Brown561
Knox511
Defiance503
Fayette460
Highland451
Champaign401
Scioto380
Perry341
Van Wert340
Seneca332
Henry290
Jackson230
Paulding230
Pike230
Adams221
Vinton222
Gallia171
Harrison121
Meigs120
Morgan110
Noble110
Unassigned00
Fort Wayne
Clear
72° wxIcon
Hi: 93° Lo: 70°
Feels Like: 72°
Angola
66° wxIcon
Hi: 92° Lo: 68°
Feels Like: 66°
Huntington
Clear
72° wxIcon
Hi: 91° Lo: 69°
Feels Like: 72°
Decatur
Clear
72° wxIcon
Hi: 92° Lo: 70°
Feels Like: 72°
Van Wert
Clear
72° wxIcon
Hi: 93° Lo: 71°
Feels Like: 72°
Few Storms Tuesday
WFFT Radar
WFFT Temperatures
WFFT National

Community Events