Crude futures plunged to fresh 17-month lows Monday amid fears of a sell-off amid the dramatic fall in equity markets, along with a partial US government shutdown. The decline comes despite OPEC ministers reiterating that they are committed to production cuts which kick off in January.
At 1505 GMT, ICE February Brent crude futures were down 86 cents/b from Friday's settle at $52.96/b, while the NYMEX February light sweet crude contract was down $1.16 cents/b at $44.43/b.
The steady decline in oil prices over the past few weeks has caused concern to several OPEC ministers, with some reiterating that the group's production cuts may even be extended from June next year, if needed.
The UAE energy minister Suhail al-Mazrouei told reporters on Sunday that if the OPEC and non-OPEC producers' plan to take 1.2 million b/d off the market does not work, there is always an option to call an extraordinary meeting.
"If we are required to extend for [another] six months, we will do it ... I can assure you an extension will not be a problem," Mazrouei said.
Petromatrix analyst Olivier Jakob said that despite "repeated comments from OPEC members that they are serious about supply reduction, and that they can consider doing additional cuts if the market balance does not improve," the market is expected to be locked in a bearish cycle.
Meanwhile on the supply side, Libyan crude production remained down by 400,000 b/d as the country's largest field Sharara remains shut-in, according to the state-owned National Oil Corporation. This was despite assurances from the country's UN-backed government that the site would reopen soon.
China released its recent oil data earlier in the day which showed that its overall crude supply in November surged 12% from a year ago to 426.17 million barrels, and rose 6% from October, led by a sharp increase in net crude imports, while domestic crude output was largely rangebound.
Buoyed by strong buying from the independent sector, China's net crude imports soared 17.7% year on year to a record high of 312.33 million barrels in November, General Administration of Customs data showed. China's imports of Saudi Arabian crude surged to a record 1.6 million b/d in November, data further revealed.
The US financial markets are still reeling from the dramatic losses seen on the S&P Index last week.
In a rare move, US Treasury Secretary Steven Mnuchin said he reached out to the heads of Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo over the weekend. Mnuchin is expected to convene a working group on Monday to reassure investors to stay calm amid big falls in US stocks last week.
All this is taking place amid a partial US government shutdown as Democrats continue to resist President Donald Trump's request for a $5 billion border wall with Mexico.
The US Department of Energy will, however, operate this week with the weekly US Energy Information Administration data expected to be released on Friday because of the Christmas holiday.
