Investing.com - The fear of a global recession and other unknowns are ruling oil more than the expressed desire of the Saudis to balance the market with production cuts.
Crude prices fell 3% for a second session in a row Monday, with U.S. West Texas Intermediate settling at a 14-month bottom below the key $50 per barrel mark for the first time since 2017. The slide was despite analysts' projections of a third-straight weekly decline in U.S. crude inventories last week, with the latest deficit seen at 2.5 million barrels.
U.S. WTI crude settled down $1.32, or 2.6%, at $49.88 per barrel, its lowest close since October 2017.
U.K.Brent, the global oil benchmark, was down $1.24, or 2.1%, to $59.04 per barrel by 2:48 PM ET (19:48 GMT)
Oil tumbled as U.S. stocks saw another sharp selloff, with the Dow giving up 400 points in late-afternoon trading.
Outside of the U.S., China reported weaker-than-expected retail sales data, which grew at its weakest pace since November 2003.
The Bank of International Settlements (BIS), an umbrella group for the world’s central banks, also warned at the weekend of more market selloffs in the near future, while Britain struggled to meet its Brexit deadline with embattled Prime Minister Theresa May having a little more than 100 days for the task.
"Oil is still trying to find a bottom as macroeconomic fears are outweighing common sense," said Phil Flynn, senior market analyst for energy at The Price Futures Group brokerage in Chicago.
"With trade war fears and a weak stock market it is hard for oil traders to look at the tightening oil market situation with any sense of dread. Instead, It is trading on what may happen If the economy slows down. We will look to the outside markets for direction as the short-term bullish fundamentals for oil don’t seem to matter."
With just two weeks before the end of 2018, WTI remains down nearly 20% on the year and some 35% lower from four-year highs of nearly $77 per barrel hit in early October. Brent is down about 12% on the year and nearly 32% lower from four-year highs of nearly $87 per barrel hit two months ago.
Dominick Chirichella of the Energy Management Institute in New York said although Saudi Arabia’s US-focused cuts on crude supply were as bullish a factor as any to oil, they weren’t an immediate game-changer due to worries about a global economic slowdown in 2019, along with anxiety that the US-China trade truce may see symbolic victories rather than actual progress.
“I am not ready to jump into the bullish waters right now," Chirichella added.