Russia says its output will rise. File Image / Pixabay
Although weak economic data from China and falling U.S. stocks contributed to crude prices resuming their downward trajectory on Friday, this didn't stop pundits from continuing their narrative of earlier this week that the market is bottoming out.
Brent fell $1.17 to settle at $60.28 per barrel, a 1.90 percent loss, while West Texas Intermediate lost $1.38 to settle at $51.20 per barrel, a 2.62 percent loss.
News of China's November retail sales growing at their weakest pace since 2003 and industrial output growing the least in nearly three years caused U.S. equity markets to fall briefly on Friday, enough to influence commodities; plus, Chinese oil refinery throughput in November fell from October, suggesting an easing in oil demand.
Joseph Cusick, president, The Cusick Group
I think $50 is the line in the sand right now
Jim Ritterbusch, president of Ritterbusch and Associates, said in a note, "The oil complex remains vulnerable to heavy selling into the equities especially when combined with a strengthening in the U.S. dollar as is the case so far today."
However, some pundits were laregely unconcerned by Friday's trading, and Joseph Cusick, president of The Cusick Group, told Bloomberg that, "I think $50 is the line in the sand right now; I would be surprised if it broke through there."
However, he added that although there are signs of an upside - which he considers to be Saudi Arabia earlier this week announcing they would cut supplies to the U.S. - there could be a challenge "down to the $51 level, then you've got to watch that area."
Cusick's guarded optimism notwithstanding, all signs point to a continued bear market, despite much attention being paid to the Organization of the Petroleum Exporting Countries (OPEC) agreeing to slash output in order to avoid a global glut.
One case in point is Russia, where Nikolai Tokarev, president of pipeline monopoly Transneft, told media on Friday that he expects his country's oil output to rise by about 2 million tonnes next year: "So it is not falling despite our agreement."
Although OPEC's past cutbacks have been fraught with cheaters and questionable overall efficacy, and although Russia of late has repeatedly questioned the need for any cutbacks to take place, some analysts maintain that far from another global glut occurring as a result of this, there will be a market tightening in 2019: that is the contention of the International Energy Agency, which earlier this week predicted a deficit will occur by the second quarter of next year due to OPEC's efforts.