Oil plunges 7% to new 2018 low

Oil plunges 7% to new 2018 low

He made the remarks a day following U.S. President Donald Trump's call for the world's top oil producer to curtail the constantly falling oil prices.

Oil prices have extended a sharp plunge today to hit the lowest levels in more than one year on fears of a global supply glut.

The Saudis have been concerned with the rising United States production and exports, which appear to have offset the majority of risks to worldwide energy markets - including the recent renewal of U.S. sanctions on Iran, an acceleration in global manufacturing, and disruptions in worldwide trade. Despite rebounding a bit to $51 a barrel on Friday afternoon, the American crude grade is deeply in bear market territory, off by more than 30 percent from its October 3 close.

When prices were climbing earlier this year, big banks were recommending investors buy back into the sector.

It was also thought that U.S. sanctions on Iran could stop it exporting to major customers, holding back supply, but most of the country's key clients have been allowed to maintain their access.

"You have to be really careful with commodities, because it's a market timing story", he added.

It peaked above $86 a barrel in early October, a four-year high. Marathon Oil dropped 3.2 percent to $15.88. Copper slid 1 percent to $2.77 a pound.

The main decision facing investors is whether they can stomach the volatility of the sector.

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"The market doesn't believe that OPEC is going to be able to act swiftly enough to offset the coming slowdown in demand", Flynn said.

"Investors recognize that the stocks are still fundamentally OK, but trying to ascertain a long-term value is very hard, so a lot of people are going to be sitting on their hands until the oil price stabilizes".

Oil bulls are hoping OPEC and Russian Federation come to the rescue by announcing steep production cuts at a meeting next month in Vienna.

The Saudis have signaled they will throttle back on production in December, but unless the Organization of Petroleum Exporting Countries and Russian Federation can reach a new deal to constrain output in Vienna next month, analysts see the prospect of sustained oversupply in 2019, undoing the group's success over the last two years to drain global inventories.

The value of a barrel of oil has tumbled approximately 20 percent since the start of the month, adding to a seven-week streak of consecutive losses.

The IG Client Sentiment Report shows 83.7% of traders are still net-long crude compared to 87.4% last week, with the ratio of traders long to short at 5.12 to 1.

The recent downtrend in oil prices has most definitely taken "some by surprise", Tamas Varga, senior analyst at PVM Oil Associates, said in a research note published Friday. "It doesn't even matter about the level, they just need stability", she said.

As recently as October, many analysts were forecasting oil could climb above $100 a barrel.

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