Dec. 18 (UPI) -- Crude oil prices early Tuesday resumed a sell-off in part on concern about the global macroeconomic outlook, and amid projections of rising U.S. output, breaking important psychological levels, an analyst said.
As of 8:00 a.m. EST West Texas Intermediate front-month futures traded at $48.93 per barrel, or 2.5 percent lower, while Brent front-month futures traded at $58.22 per barrel, or 2.3 percent lower.
They were both clearly below the psychological barriers of $50 per barrel of WTI and $60 per barrel for Brent, based on recent trading levels.
"The sell-off in crude oil has resumed after initially pausing in the aftermath of the OPEC+ decision to cut production by 1.2 million barrels per day over the coming months," Ole Hansen, head of commodity strategy at Saxo Bank, told UPI.
OPEC and non-OPEC announced the decision to cut production on Dec. 7 after intense discussion and at the end of a week when one OPEC member announced it was pulling out of the cartel.
Traders have said the market likely had discounted such an announcement amid plunging prices since early October. There also are questions as to whether the producer nations would be able carry out their accord to reduce sales volumes at a time when prices are declining, which would lower their revenue.
"The limited bounce seen in the aftermath of that decision combined with the continued deterioration in the macro economic outlook has acted as a red flag, not to the bulls, but instead the bears who have sent WTI and Brent below the psychological important levels," Hansen said.
Hansen also mentioned the impact of a Drilling Productivity Report for January issued by the Energy Information Administration that "sees U.S. shale oil production rise by 134,000 barrel per day to 8.17 million barrels per day." The EIA issued the report on Monday.
Now Brent is "close to challenging support at $57 per barrel, the 50 percent retracement of the rally from the 2016 low," Hansen said. "A break below would from a technical perspective put $50 per barrel into focus."
The Dow Jones Stock Index fell more than 2 percent on Monday to 23,592.98 points, reflecting concern about the economic outlook.
The index has declined from 25,826.43 on December 3, in part on concerns that the United States and China could intensify a trade dispute and lead to slower growth that could curb oil demand.
Both countries are the world's leading economies. China is the world's leading energy importer.