Oil prices were lower on Tuesday afternoon, weighed by profit taking and a marginally stronger dollar. U.S. WTI futures were at $61.99 per barrel as of 1:39 p.m. GMT, and Brent crude futures were at $65.14 per barrel, a 0.81 percent decline. Brent is now trading at a premium of less than $3 compared to WTI, down from above $7 at the start of 2018. This shift has made it less enticing for consumers in Europe to import U.S. crude.
Saudi Arabia has been lobbying to keep prices high by instigating a production cut for both OPEC and non-OPEC partner countries. The cut has recently been confirmed with 133 percent compliance, though U.S. overproduction is threatening to weigh prices to the downside. The United States added rigs last week for the fourth consecutive week, bringing the total number to 798.
Global stocks were also under pressure on Wednesday afternoon as bond market borrowing costs regained traction lost in recent sessions and the dollar continued retreating from its three-year lows. The dollar was trading at 107.15 yen, up 0.53 percent. The greenback also gained against the dollar to trade at $1.2339. Europe’s main indexes were fairly stable on Tuesday but Asian markets closed broadly lower, with the Nikkei 225 closing down 1 percent, South Korea’s Kospi falling 1.13 percent and the Shanghai Composite slumping 0.46 percent. It remains to be seen whether these declines will signal a buy to push markets higher or whether they will begin a longer-term downtrend. Traders are already concerned about what will happen during the New York session after Walmart shares plummeted more than 6 percent in pre-market trade on weak profits. The VIX volatility index was up 21 percent in advance of the U.S. open.