Despite reassurances of production cuts from the Organization of Petroleum Exporting Countries, crude oil prices and energy-related ETFs continued to retreat on increasing concern over the potential negative effects of a slowing global economy.
On Tuesday, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, declined 3.5% and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, decreased 2.5%.
Meanwhile, WTI crude oil futures were 4.9% lower to $47.5 per barrel and Brent crude fell 3.7% to $57.4 per barrel. The oil benchmarks have declined about 35% from their four-year highs at the start of October and are now trading at their lowest level in more than a year.
“The current price fall is greatly aided by the general fall in global equities due to persistent concerns about economic growth, including the U.S.-China trade dispute,” which has led to “fears of downward revisions in global oil demand growth,” Tamas Varga, analyst at brokerage PVM Oil Associates Ltd., told the Wall Street Journal.
Furthermore, rising supply, notably from signs of U.S. shale and Russian crude production, have also pressured global oil prices.
Shale Oil Production
According to the U.S. Energy Information Administration, shale oil production would rise from December by 134,000 barrels per day to 8.17 million barrels per day in January.
Additionally, Russia said its oil output surged to a record 11.42 million barrels per day in December.