London: Oil fell Monday, in line with another decline across global stock markets, which came under pressure from concern about a US government shutdown and a worsening world economy.
Brent fell 11 per cent last week and hit its lowest since September 2017, while US futures slid to their lowest since July 2017, bringing the decline in the two contracts to 35 per cent so far this quarter.
The price of oil has already fallen by more than 30 per cent so far this quarter to its lowest since the third quarter of 2017, as investors have grown increasingly wary of the impact to global growth, and crude demand, from an escalating trade dispute between the US and China.
“Today is going to be a market of very thin liquidity and we don’t have strong convictions in such market conditions. Brent has managed to break $55.00 a barrel at the end of last week, the short-term momentum is negative,” Petromatrix strategist Olivier Jakob said.
The macroeconomic picture and its impact on oil demand continue to pressure prices. Global equities have fallen nearly 9.5 per cent so far in December, their biggest one-month slide since September 2011, when the eurozone debt crisis was unfolding.
The US Senate has been unable to break an impasse over President Donald Trump’s demand for more funds for a wall on the border with Mexico, and a senior official said the shutdown could continue until January 3.
Investors have flocked to perceived safe-haven assets such as gold and government debt, at the expense of crude oil and stocks.
The trade dispute between the US and China and the prospect of a rapid rise in US interest rates have brought global stocks down from this year’s record highs and ignited concern that oil demand will be insufficient to soak up any excess supply.
Opec and allies led by Russia agreed this month to cut oil production by 1.2 million barrels per day from January. Should that fail to balance the market, Opec and its allies will hold an extraordinary meeting, Suhail Mohammad Al Mazroui
UAE Minister of Energy and Industry, said on Sunday.
“Oil ministers are already taking to the airwaves with a “price stability at all cost” mantra,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.