Oil prices dropped more than $1 a barrel in choppy trading on Tuesday on signs of rising supply and concern that global economic growth and fuel demand will fall victim to a deepening of the U.S.
Both benchmarks were about $10 a barrel below four-year highs reached on October 3.
Investors will look to official government data on US inventories due on Wednesday.
There's at least one similarity between 2016 and 2018: The oil market experienced strong gains in the first six months of the year before hitting a volatile patch in the second half.
Thus, the cost of the futures on Brent crude rose by 0.63%. Both stock markets and crude futures jumped in early October before selling off sharply.
Oil has been caught in the global financial market slump this month, with equities under pressure from the trade conflict between the world's two largest economies. Earlier fears that American sanctions on Iran could result in a crude shortage are also receding, as the US shale boom gains new momentum and the Trump administration vacillates on how aggressively to target Iranian exports.
But there's another similarity between July 2016 and October 2018.
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The US is set to impose new sanctions on Iranian crude from next week and exports from the Islamic Republic have already begun to fall.
Petoro AS, the company that manages the Norwegian government's massive stake in the country's oil and gas fields, is warning that the industry's costs could be rising for the first time since crude's collapse in 2014.
If the reports of a waiver are untrue and all of Iran's oil output is sanctioned by the US, then it could be a problem for the global oil market, he said. Not only did we see a 1.5-million-barrel release from the US Strategic Petroleum Reserve, to cool off what really was a bullish Energy Information Administration (EIA) supply report, you also had a suggestion by US Security Advisor John Bolton that we might not see zero exports from Iran right away.
Structurally oil prices remain bearish as the Brent curve moves deeper into contango (Spot price lower than forward price).
US production hit an all-time high of 11.3 Mmbpd in August, according to the Energy Information Administration's first reading of monthly data released Thursday. WTI lost 2.93 USA dollars to settle at 66.43 dollars a barrel, and Brent sank 3.39 dollars to 76.44 dollars per barrel. Brent was up 29 percent over the same period.
Hedge funds are still overwhelmingly long on oil and may have to liquidate positions if prices keep falling, accelerating a market sell-off, analysts say. US West Texas Intermediate (WTI) crude futures were firmer, however, at $67,19 a barrel, up 15 cents from their last settlement, bringing down the spread between the two main oil price benchmarks to below $10 per barrel. WTI picked up 0.26 dollar to settle at 67.59 dollars a barrel. In 2017, the country consumed more than 19 million barrels of crude oil every day.