Thursday, November 8, 2018 - 18:01
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Oil Selloff Continues, $60 Support Looks Fragile - Is $60 oil on its last legs before OPEC comes to save the day for the bulls?

The front-month contract in U.S. West Texas Intermediate came less than $1 to breaking the $60 per barrel support in Thursday's session as the tumble in crude futures continued a ninth-straight day, priming the market for its worst losing streak in more than four years.

Technically in a bear market after losing 20% from the highs of early October, the selloff in oil seems unstoppable despite OPEC's rumblings on Wednesday that it might join Russia to cut output as early as next month to put a floor beneath the market.

Instead, traders seemed fixated on the new weekly record high of 11.6 million barrels per day in U.S. crude production cited by the Energy Information Administration. The EIA, which delivered that data on Wednesday, also announced a seventh-straight weekly rise in U.S. crude stockpiles, of which six have been outsize builds.

Compounding the bearish mood, market intelligence firm Genscape reported on Thursday a 2.2-million-barrel weekly build at the Cushing, Okla. delivery base for WTI, traders who saw the data said. Any weekly Cushing build above 1 million barrels is typically bearish for oil prices.

"The market is almost daring OPEC to do something now," said John Kilduff, oil trader and partner at New York energy hedge fund Again Capital. "We have an OPEC meeting this weekend and I find it hard to believe they are not going to get together and try and talk this market back up."

The Joint OPEC-Non-OPEC Ministerial Monitoring Committee, which includes Saudi Arabia and other major Middle Eastern oil producers along with Russia, will be meeting this weekend in Abu Dhabi.

That will be followed by OPEC's monthly meeting in Vienna on Dec. 6, where production quotas are usually finalized. Russia will be meeting with OPEC a day after that, in line with the cooperation that has existed since 2015 between the cartel and Moscow to intervene in any collapse in global oil prices.

U.S. WTI was 47 cents, or 0.8%, at $61.20 per barrel by 1:00 PM ET (18:00 GMT), after hitting an 8-month low at $60.56. In early October, WTI hit four-year highs of nearly $77.

U.K. Brent crude, the international benchmark for oil, was off 2 cents, or 0.03%, to $72.11 per barrel. That was about 17% off Brent's four-year highs above $86 hit last month. Earlier on Wednesday, Brent was down as much as 76 cents.

If WTI stays in negative territory until Thursday's settlement, it will be the market's ninth-straight day of losses. The last time WTI experienced such a losing streak was between June 26 and July 9 2014, when it fell 10 sessions in a row.

Tariq Zahir, who trades long-dated spreads in WTI at Tyche Capital Advisors in New York, also believes OPEC will intervene by this weekend to try and pull the market higher.

"But the market's most likely going to break $60 first as the record highs in U.S. production is a bigger worry for now," said Zahir.

© Reuters.