Market Report & Analysis for 11/14/2018 Morning Edition

Morning Market Overview

New York Mercantile Exchange oil futures nearest delivery and Brent crude on the Intercontinental Exchange settled mixed, with West Texas Intermediate ending down for an 11th consecutive session and at a nine- month low, reversing to the downside late in the session that coincided with a tweet from U.S. President Donald Trump. “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” Trump tweeted at 1:21 PM ET, with WTI slipping below $60.00 bbl for the second time since March at the same time. The selloff in WTI futures intensified since the close.

Trump’s tweet follows the Joint Ministerial Monitoring Committee meeting in Abu Dhabi on Sunday, with the committee overseeing the 2016 Vienna production agreement between members of the Organization of the Petroleum Exporting Countries, Russia and nine non-OPEC oil producers. In the lead up to OPEC’s Dec. 6 biannual meeting, JMMC said a review shows an oversupplied market in 2019, and highlighted uncertainties that could affect the world economy and global oil demand.

JMMC directed the Joint Technical Committee to “further refine the scenario analysis [for] options on new 2019 production adjustments, which may require new strategies to balance the market.” Reports over the weekend indicate Saudi Arabia thinks the market will be oversupplied by 1.0 million bpd, and has said it would cut output by 500,000 bpd in December.

The decline would come from a record high output rate for the Saudis at 10.7 million bpd. Global oil demand is expected to decline by 1.2 million bpd from inherently strong demand during the fourth quarter to the cyclically weak first quarter, according to the International Energy Agency. IEA will update their monthly outlook Wednesday morning, while OPEC will provide their short-term forecast Tuesday morning.