Oil Crashes After Trump Says Prices Should Be 'Much Lower'

Will Gas Prices Go Up? Saudi Arabia to Cut Production

The U.S. decision to grant waivers that will allow importers of Iranian oil to keep buying in spite of sanctions confounded expectations of a looming supply crunch, helping trigger crude's collapse. The decline in prices continued last week after the U.S. said it would let eight countries keep importing Iranian oil.

Worldwide benchmark Brent crude oil futures were down 9 cents at $65.38 per barrel.

"Although the oil market has reached a balance now, the forecasts for 2019 for non-OPEC supply growth indicate higher volumes outpacing the expansion in world oil demand, leading to widening excess supply in the market", OPEC said in the report.

In its monthly report, Opec said world oil demand in 2019 would rise by 1.29 million barrels per day (bpd), 70,000 bpd less than predicted last month and the fourth consecutive forecast cut.

Saudi Arabia's Oil Minister Khalid al-Falih announced on Monday that the kingdom would cut oil production despite warnings from President Donald Trump.

That led to a sharp price drop on Monday and the sell-off continued into Tuesday.

"This will, in our view, cap any upside above $85 per barrel (for oil prices)", said Jon Andersson, head of commodities at Vontobel Asset Management. Brent has lost 25 per cent since peaking at a four-year high in early October.

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OPEC warned on Tuesday that an oil supply glut could emerge in 2019 as the world economy slows and supply from rival producers rises more quickly than expected, building a case for a policy U-turn to cutting output at a meeting December 6.

But Trump has made it clear he wants oil prices to fall.

Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown, as seen with the economic contractions in powerhouses Japan and Germany during the third quarter as well as in China's falling auto sales. In July, Trump called the organization a "monopoly", warning on Twitter that "gas prices are up & they are doing little to help".

Oil prices, which spiked in October in the run-up to the reimposition of United States sanctions on Iran's oil industry on November 5, fell after the U.S. granted waivers to eight countries importing Iranian crude for a 180-day period.

Brent dropped US$3.25 a barrel, or 4.5%, to a low of US$66.94 as of 10.40am EST (1540 GMT).

Riyadh indicated on Monday it was on course to ignore the United States president's wishes at OPEC's next meeting due in December because it saw a need to reduce OPEC output by a collective one million barrels per day during 2019.

Trump posted a tweet on Monday meant to put pressure on OPEC, calling for no supply cuts to prop up prices.

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