Oil hits 17-month low on supply, slower demand expectations

HOUSTON (ICIS)–NYMEX WTI crude futures declined $3.64/bbl to $46.24/bbl on Tuesday, sending US oil prices to their lowest level in 17 months.

The decline was driven by fears of lengthening oil supplies along with worries of a possible economic slowdown.

Oil production from seven major US shale basins is expected to exceed 8m bbl/day before the end of the year, according to the Energy Information Administration (EIA).

Russian oil output is also poised to reach record levels this month while announced production cuts by OPEC will not take effect until next month.

Concerns of a possible slowdown in global economic growth also pressured oil futures. Investors are anticipating a slowdown in economic growth in 2019, encouraging a sell-off in the crude complex.

The market is closely watching the US Federal Reserve’s announcement on Wednesday regarding interest rates. The market anticipates another rate hike by the Fed and will be monitoring the language used in the announcement for indications as to whether or not the bank intends to implement further rate increases in 2019.

The photo above shows an oil pump. Image by Shutterstock