US oil prices were down almost 8 per cent on Tuesday on rising global crude inventories and concerns over deteriorating economic growth worldwide.  Apache photo.

Oil prices weakest since September 2017

Oil prices took a hit on Tuesday after reports of growing crude inventories were released at a time when investors are concerned about deteriorating global economic growth.

By 2:45 p.m., EST, US WTI had fallen $3.87 to $46.33/barrel, and benchmark Brent dropped $3.53 to $56.08/barrel.

Oil prices fell despite rising world stock markets which have suffered steep declines in the past two months.  Investors are now looking ahead to possible interest rate increases by the US Federal Reserve.

More fund managers are forecasting global growth to weaken in the coming 12 months, the worst outlook in over 10 years, according to a Bank of America Merrill Lynch December investor survey.

“There was a flood of supply side news yesterday which, in combination with the demand destruction that the stock market slide implied, got us below $50 (a barrel for US crude), and that gave us a strong sell signal,” Bob Yawger, director of futures with Mizuho told Reuters.

According to Reuters, Buzzard, Britain’s largest oil field at 150,000 barrels per day, restarted after repairs were completed on pipework, boosting global supplies.

As well, the US government reports that shale production is expected to top 8 million barrels per day (b/d) this year.  Data from the Energy Information Administration suggest that US crude stocks are also expected to rise this week.

Since October, both Brent and US WTI have fallen over 30 per cent because of oversupply.  Earlier in the month, OPEC and Russia agreed to cut their production by 1.2 million b/d, or over 1 per cent of the world’s demand, in an effort to curtail rising stockpiles.

The cuts will not begin until January and recent production by the United States, Russia and Saudi Arabia has been at or near record highs.  A Reuters’ source says Russian crude output hit a record high 11.42 million b/d this month.

US output has surpassed both Saudi Arabia and Russia with a total crude output hitting a record high 11.7 million b/d.

Market intelligence firm Genscape data shows Cushing, Oklahoma, crude inventories rose by over 1 million barrels from Dec. 11 to 14.