Commodities: Energy futures heavily discounted on Black Friday
Energy futures continued coming under overhwelming selling pressure at the of the holiday-shortened trading week as investors in the States reacted with a lag to news during the previous session that Saudi output was also running at a record pace in November, alongside that in the US and Russia.
On Thursday, Khalid Al-Falih said that the Kingdom's production of crude oil had hit 10.7m barrels of oil a day, but traders were quick to point out that there was in fact a very volatile cocktail of factors at work.
"But the eye-watering 6.5 % plummet in oil prices is unmissable with uncontested bearish sentiment erupting through capital markets like an uncontainable oil gusher. Indeed, one of the biggest and quickest wildcats runs in some time. But everything that's been identified bearish all week long remains intact, and while it's challenging to locate one smoking gun, instead its a toxic combination of factor, highlighted by OPEC uncertainty, a very shaky risk environment, the precipitous swing on Fund positioning (based on CFTC report)," said Stephen Innes, Head of Trading for APAC at Oanda.
"But what's unmistakable to oil patch veterans is just how mind-bogglingly bearish the Oil community has become on such short order. And as Brent spreads move from backwardation to contango its unlikely buy only funds or even passive investors for that matter will be attracted to the markets anytime soon. And with President Trump appearing to have Saudi Arabia over the proverbial " oil barrel” here could be more pain to be had unless OPEC can pull a rabbit back out of the hat. B but it indeed it looks like the Genie is out of the bottle on this one," Innes added.
As of 1923 GMT, front month Brent crude oil futures drop 6.07% to $58.80 a barrel on the ICE, alongside a 7.76% fall in similarly-dated West Texas Intermediate to $50.39 a barrel on NYMEX.
Natural gas futures in the States were also lower, sliding 3.19% to $4.31/MMBtu while heating oil futures were down 4.77% at $1.8762 per gallon.
Analysts at Sucden Financial chimed in telling clients: "The Saudis have indicated that they may be at record production levels currently but they plan to rein in output from Dec but unless Russia is prepared to tow the line and agree to cut too, the market fears a sustained surplus through 2019 as US stockpiles continue to build."
In parallel, the Bloomberg commodity index was plumbing a fresh 52-week low at 81.48 as the US dollar sport index added 0.26% to 96.9630.
Base metals futures were also softer outside of aluminium, with three-month LME copper slipping from $6,254 per metric at the open to finish at $6,207 per metric tonne.