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Oil prices tumble after Saudi Arabia says production is coming back online

Saudi Aramco CEO Amin Nasser says oil production is almost fully recovered following an attack on a facility in Saudi Arabia.

Posted: Sep 18, 2019 3:52 AM
Updated: Sep 18, 2019 3:58 AM


Oil prices dropped sharply Tuesday, following Monday's surge that sent shock waves around the world.

US oil futures settled down 5.7% at $59.24 a barrel. It was the worst one-day drop for US oil since August 1, according to Refinitiv. Oil prices initially fell after Reuters reported Saudi Arabian oil production would return to normal within two to three weeks. Tuesday afternoon, Saudi Energy Minister Abdulaziz bin Salman said the country's oil exports would not fall in September, as the kingdom will rely on reserves to keep exports stable.

Investors took that as a positive sign about the impact of the weekend's attacks on global oil supply.

Brent crude, the international benchmark, settled down 6.5% at $64.55. On Monday, oil prices shot up more than 14%.

US stocks finished slightly higher, eking out gains just before the market closed. The Dow finished 0.1% or 32 points higher, while the S&P 500 closed up 0.3%. The Nasdaq Composite closed up 0.4%.

Elsewhere in the world, stocks closed mostly in the red.

Stock investors' focus is turning from oil to the Federal Reserve, which is beginning a two-day monetary policy meeting that will culminate in its interest rate update on Wednesday.

Expectations for a quarter-percentage-point rate cut have dropped to less than 50%, according to the CME's FedWatch tool. That's down from 92% last week, when the majority still expected rates to be slashed.

A half percentage point cut is no longer priced in at all.

"There have been a variety of explanations for the change in expectations, be it stronger data last week, improved risk appetite, trade war optimism and even higher inflation potential following the oil price spike," said Craig Erlam, senior market analyst at Oanda.

"Whatever the reason, it would be an interesting move from the Fed to hold at the meeting and one that would almost certainly draw the ire of President Trump, although they must be used to that by now," Eriam added.

Investors were also concerned about a sudden spike in the overnight lending rate. The repo rate, which is the borrowing rate banks charge each other for short-term loans, jumped overnight, indicating low market liquidity. The New York Fed injected $53 billion to help matters. The market for US Treasuries is one of the most liquid markets in the world, so the repo rate spike was surprising.

Better-than-expected economic data has added to investors' concerns that the Fed may hold off on cutting rates. Industrial production was stronger than expected in August, even though the US manufacturing sector shrank for the first time in August.

Meanwhile, the National Association of Home Builders housing index for September climbed more than expected. Mortgage rates have been dropping to multi-year lows this summer in the United States, as longer-dated Treasury yields keep falling. This in turn has sparked some life in the housing sector.

Oregon Coronavirus Cases

Data is updated nightly.

Cases: 219755

Reported Deaths: 2858
CountyCasesDeaths
Multnomah41855618
Washington27838258
Marion24509333
Clackamas19964242
Lane14885174
Jackson12709156
Deschutes1056587
Umatilla958794
Linn627782
Yamhill507481
Klamath494479
Douglas451888
Polk431457
Josephine416975
Malheur366667
Benton347422
Jefferson249942
Coos231939
Columbia208732
Union169424
Wasco156131
Lincoln154422
Crook139924
Hood River126734
Morrow122917
Clatsop117610
Baker111517
Curry79112
Tillamook7605
Grant5637
Lake4868
Harney46011
Wallowa2396
Gilliam871
Sherman872
Wheeler441
Unassigned00

California Coronavirus Cases

Data is updated nightly.

Cases: 3966943

Reported Deaths: 64429
CountyCasesDeaths
Los Angeles130334324691
Riverside3085464662
San Bernardino3067695240
San Diego2980023798
Orange2824265144
Santa Clara1234042099
Sacramento1157321781
Kern1132161425
Fresno1046391746
Alameda971211286
Ventura838691044
Contra Costa77708834
San Joaquin769151460
Stanislaus658931095
Tulare50409854
San Mateo44622588
Monterey44523528
San Francisco40544563
Solano36004263
Santa Barbara35741467
Merced33321485
Sonoma32880330
Imperial29164745
Placer25146307
Kings23765251
San Luis Obispo21970265
Madera17058249
Santa Cruz16616207
Marin14958239
Yolo14863215
Butte13235205
Shasta13043242
El Dorado11125120
Napa1044282
Sutter10203127
Yuba700450
San Benito628263
Tehama589266
Lassen588826
Nevada541675
Humboldt511453
Mendocino471052
Tuolumne453573
Lake423866
Amador387748
Siskiyou256640
Glenn246527
Colusa235718
Calaveras231658
Del Norte16688
Inyo147338
Mono13265
Plumas7726
Modoc5767
Mariposa5007
Trinity4676
Sierra1310
Alpine890
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