Oil price volatility driven by supply curbs and worries about economic contraction

Oil price volatility driven by supply curbs and worries about economic contraction

While the recent announcement that Opec and Russian Federation will cut production helps alleviate concerns about oversupply, the pivotal questions in the coming year are whether Opec and Russian Federation will maintain their production discipline and what might happen in June, when the current agreement expires.

China's factory activity falls, adding to concern about economic slowdown and fuel demand.

In physical Crude Oil markets, Top exporter Saudi Arabia is expected to cut February prices for heavier grades sold to Asia by up to 50c bbl due to weaker fuel oil margins, respondents to a Reuters survey said Thursday.

Brent crude futures LCOc1 were at $56.60 per barrel at 0741 GMT, up 65 cents, or 1.2 per cent, from their last close.

As for the latest production figures.

The market will be on the lookout for the American Petroleum Institute's weekly snapshot on USA oil supply-demand for the week ended December 28, ahead of official data on Friday from the Energy Information Administration.

"Oil prices ... registered their first yearly decline in three years on fears of a slowing global economy and concerns of an ongoing supply glut", said Adeel Minhas, a consultant at Australia's Rivkin Securities. In addition, the US oil production will continue to add a bearish tone, separately said independent analyst Lakshan de Silva.

Quadrantids meteor shower to take place overnight Thursday into Friday
Although not as well-known as other meteor showers, the Quadrantid is expected to average 120 meteors per hour at its peak. And if you're lucky, you might be able to catch the result: colorful meteor showers that light up the night sky.

Traders are “now buying key support and looking ahead to the OPEC cuts that will now go into play, ” Phil Flynn, senior market analyst at Price Futures Group, told MarketWatch.

"We've seen a couple of times where the market's attempted to pick itself up and it seems the selling pressure always returns", said Gene McGillian, market research manager at Tradition Energy in Stamford, Connecticut. United States crude slipped 62 cents to Sh4,479 ($44.79).

"Market expectations for continued strong oil demand growth remain in place, despite concerns about slowing demand growth as a result of weaker economic growth, the impact of tariffs and a strong United States dollar", remraked Steve Wood, the managing director for Oil & Gas at Moody's. Earlier in the week, the U.S. Energy Information Administration said U.S. production hit another all-time high in October at 11.54 million bpd. "Low gas prices are like another Tax Cut!" he wrote on his official Twitter account on Tuesday.

Crude prices had previously fallen after the U.S. followed most other major economies into a manufacturing downturn.

Independent market analyst Greg McKenna said in a note on Wednesday that it was "difficult for traders and investors to ignore what looks like a genuine global economic slowdown".

"OPEC+ strategy for supporting prices over market share is not working, said MUFG bank". "Saudi Arabia is clearly trying to to get the U.S. stockpile number down because it is by far the most visible of all global stockpiles and that is where you go first if you want the market to at least buy into the idea that you are trying to control the market".

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