Crude oil prices inch lower as many major economies show signs of a slight downturn in the third quarter. Photo by John Angelillo/UPI | License Photo
Nov. 20 (UPI) -- Strong production trends in the United States and a slump in growth in the world's leading economies left crude oil prices deep in the red early Monday.
The Organization for Economic Cooperation and Development reported total growth in real growth domestic product slowed to 0.6 percent in the third quarter, down from the 0.8 percent reported for the second quarter.
Japan slowed down the most among the major seven economies in the OECD, moving from 0.6 percent in the second quarter to 0.3 percent. In the United States, growth slowed from 0.8 percent to 0.7 percent, though the third quarter estimate is the same as this period last year.
China, the world's second-largest economy, behind the United States, slowed from 1.8 percent to 1.7 percent, which was lower than last year by 0.1 percent.
The slowdown puts a damper on expectations in a crude oil market where traders are watching the level of commercial oil stockpiles carefully. Oversupply conditions last year pushed oil to historic lows, though production cuts from the Organization of Petroleum Exporting Countries have stimulated the price for crude.
U.S. oil output, however, has balanced the OPEC effort. Last week, federal data show U.S. crude oil production at 9.64 million barrels per day, passing the last record of 9.61 million barrels per day set in July 2015, when oil prices were only one year removed from the $100-per barrel norm.
The price for Brent crude oil was down 1.3 percent a few minutes before the start of trading in New York to $61.90 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.7 percent to $56.31 per barrel.
Some of the downturn may be a reflection of jitters ahead of an OPEC meeting at the end of November that could determine the fate of the production cut agreement. Iran's oil minister said Monday there seemed to be broad-based support for an extension, though that talk has been so consistent for so long that traders may have priced that in long ago.
"I basically think that OPEC has been boiling the chicken on production cut extension news for so long that the soup cannot get any stronger," Ole Hanson, the head of commodity strategy at Saxo Bank, told UPI.