US Oil Plunges On Overnight Futures Market
US oil has taken a big drop in after-hours trading on the night of July 6, 2017. Check out this chart which shows the big drop today.
As of 7:27 PM Pacific time in the US, oil futures were trading at $44.90.
As oil prices fall, it’s like a global margin call that goes out with sovereign wealth funds to either reduce their holdings in other assets or pony up more money to meet the margin call. This is why the direction of our markets are all about the oil.
US oil prices fell by more than 1 percent in the futures market with US crude futures dipping below $45 per barrel as news of a rise in production added to earlier reports that OPEC output was also on the rise.
Brent crude futures, the international benchmark for oil prices, were trading down 58 cents, or 1.2 percent, at $47.53 per barrel by 0137 GMT (9:37 p.m. ET).
Basically you have the US increasing production by 1 percent week-over-week to 9.34 million barrels per day. Year-over-year, that’s an increase of more than 10%.
With the US economy slowing, which will result in the global economy slowing, the demand for oil will eventually drop at the same time production is being increased. That’s a bad combination.