20 December 2018, News Wires — Oil prices fell more than 4 percent on Thursday, hitting their lowest in more than a year on worries about oversupply and the outlook for energy demand as a U.S. interest rate rise knocked stock markets.
Equities dropped worldwide after the U.S. Federal Reserve raised rates and maintained most of its guidance for additional hikes over the next two years, dashing investor hopes for a more dovish policy outlook.
U.S. light crude oil fell by $2.35 a barrel, or 4.9 percent, to a low of $45.82, before recovering some ground to around $46.45 by 1430 GMT.
Brent dropped by $2.60, or 4.5 percent, to $54.64 a barrel, its lowest since September 2017, and last traded around $55.54, down $1.70.
“Oil prices are selling-off once again as market players take their cues from a rout on global stock markets,” said Stephen Brennock, analyst at London brokerage PVM Oil.
The Organization of the Petroleum Exporting Countries and other oil producers including Russia agreed this month to curb output by 1.2 million barrels per day (bpd) in an attempt to drain tanks and boost prices.
But the cuts will not happen until next month, and production has been at or near record highs in the United States, Russia and Saudi Arabia.
OPEC plans to release a table detailing voluntary output cut quotas for its members and allies such as Russia in an effort to shore up prices, OPEC Secretary-General Mohammed Barkindo said in a letter seen by Reuters on Thursday.
U.S. inventory data offered some support.
U.S. crude inventories fell by 497,000 barrels in the week to Dec. 14, the U.S. Energy Information Administration said, smaller than the decrease of 2.4 million barrels analysts had expected.
Distillate stockpiles, which include diesel and heating oil, dropped by 4.2 million barrels, the EIA said, versus expectations of a 573,000-barrel increase.
Distillate demand rose to the highest since January 2003, which bolstered buying, particularly in heating oil futures, the market’s proxy for diesel.