Crude oil swung lower on Tuesday, extending an early-week slump that has raised alarm over the trajectory of energy markets in 2019 and beyond. Investors and consumers can expect volatility to be the new norm in a tri-polar world where the United States, Russia and Saudi Arabia are all vying for influence.
Oil prices were down across the board Tuesday, as the U.S. and international benchmarks reversed earlier gains. U.S. West Texas Intermediate (WTI) futures tumbled 88 cents, or 1.6%, to $53.68 a barrel on the New York Mercantile Exchange. On Friday, the contract settled at $55.26 a barrel, its highest since mid-November.
Brent crude, the international futures benchmark, declined 54 cents, or 0.9%t, $61.97 a barrel. Brent reached a session high of $63.02 a barrel before turning lower.
Commodity markets are being pressured by a resurgent U.S. dollar, which is on track for its fourth consecutive daily advance. The dollar index (DXY) climbed 0.2% to 96.03, its highest in nearly two weeks.
A Tri-Polar World
The emergence of the United States as an energy superpower has had a dramatic effect on the market. Not only has the Permian shale boom undermined OPEC’s grip on the market, it has given the United States a new hope of finally achieving energy independence. Case in point: in December, the U.S. briefly turned into a net of crude for the first time in almost 75 years.
As the global energy balance continues to shift, Middle Eastern producers have faced difficulty engineering prices to their liking. The Organization of the Petroleum Exporting Countries and its allies agreed on a fresh round of output cuts in early December, but the impact of agreement wasn’t felt for at least another month.