U.S. oil prices sank to their lowest level since October 2017 as comments from President Trump made in support of Saudi Arabia added to concerns about an oversupply of oil relative to its demand.
Prices of crude oil traded in New York City and London fell more than 6% Tuesday. West Texas Intermediate crude oil for January delivery briefly fell below $53 a barrel Tuesday. In early October, the oil traded above $74 a barrel. Today’s low-point marks a 28% drop in oil prices in less than seven weeks.
Crude oil prices have been falling amid concerns about a steady increase in oil production at a time when demand seems to be tapering off. Oil has also followed U.S. stock prices lower with uncertainty surrounding the global economy’s outlook in 2019.
The decline in oil prices increased Tuesday after the White House released a statement about “standing with Saudi Arabia.” “After the United States, Saudi Arabia is the largest oil-producing nation in the world,” Trump said in the statement. “They have worked closely with us and have been very responsive to my requests to keeping oil prices at reasonable levels—so important for the world.”
Trump also expressed skepticism that the Saudi crown prince ordered the murder and dismemberment of Jamal Khashoggi, a journalist who had been critical of the Saudi leadership. The CIA has reportedly concluded that Crown Prince Mohammed bin Salman ordered Khashoggi’s assassination in Turkey last month.
According to The Wall Street Journal, some market participants read Trump’s comments as part of an effort to keep Saudi Arabia from slashing oil production, which the country has done at times to help shore up oil prices. Oil-producing nations are expected to meet next month to discuss adjusting production levels given the concerns about an oversupply.
Oil stocks also tumbled Tuesday as the price of oil continued to decline, with shares of Exxon and Chevron both down 2.8%. Smaller oil companies were hit harder in the selloff. ConocoPhillips fell 3.7%, EOG Resources fell 3.2%, and Occidental Petroleum fell 4.2%. The Dow Jones Industrial Average, by contrast, fell 2.2% Tuesday to close at 24,465.64.