Oil price slide weighs on markets ahead of UK public finances – business live

Nordic bank Danske say that oil’s slide into a bear market is worrying investors worldwide:

FXTM research analyst Lukman Otunuga predicts that prices will keep falling:

Oil’s ongoing oversupply woes reached an ear-piercing crescendo during Tuesday’s trading session as WTI Crude plunged into a bear market after growing signs of rising production across the globe. WTI Crude was already extremely sensitive and vulnerable to losses amid the bearish sentiment with reports of an unexpected supply increase by Libya sending prices below $43.

Although OPEC initially displayed good intentions when it exempted some members from the production cuts, this has come back to haunt them with more production from Libya, Nigeria, and Iran. With the bias towards oil heavily tilted to the downside, further losses should be expected as bears exploit persistent oversupply concerns to ruthlessly attack the commodity.

This is from Jonny Bo Jakobsen of Nordea Markets:

Michael Hewson of CMC Markets also expects oil to keep sliding this summer:

The risk is we could see further declines, particularly if shale producers continue to add rigs, and demand continues to slow in Asia, and there are no further supply disruptions.

The key support levels sit down at the November lows at $43 on Brent and $42 on US WTI, which if they give way $40 could come into view very quickly indeed and drag equity markets down with them, especially if today’s weekly inventory data disappoints.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Traders are edgy this morning after the oil prices tumbled to seven-month lows.

The cost of a barrel of Brent crude has slumped below $46 per barrel for the first time since November 2016, dragged down by signs that the market is oversupplied.

US crude prices also took a bath, falling 20% from their recent highs to around $43.50 per barrel. That put oil into a bear market for the first time since August, on signs that the global supply glut of oil isn’t going away.

These moves show that the oil market is losing faith in the Opec cartel’s ability to prop up prices, despite producers recently agreeing to extend production curbs until March 2018.

Amanda Cooper, Reuters’ oil expert, tweets that bearish oil traders have the upper hand.

The selloff was partly triggered by signs that Libya has tripled its production levels in the last year.

Libya is an Opec member, but exempt from its production cuts deal, as Naeem Aslam of Think Markets explains:

As for the black gold, investors are becoming a little anxious towards the rising production out of Libya, however, OPEC has stated it before that the production level out of Libya is already taken into account in the part of their production cut strategy. Saudi Arabia also reported higher export data on Tuesday.

It is important that not only production cuts are under control but also the export numbers as well.

New oil inventory figures are released by the US government later today, which could move the markets again….

Also coming up today.

Never exactly a shrinking violet, the UK economy will gambol back into the spotlight this morning when public finance figures for May are released.

The City predict that public sector net borrowing fell to around £7bn, from over £9bn a year ago, as the long drudge of deficit reduction continues.

Over in parliament, the Queen will outline the government’s legislative programme – even though prime minister Theresa May hasn’t agreed a deal with the DUP to prop up her government.

The Queen’s speech is likely to be dominated by Brexit, as the BBC’s Norman Smith explains…

The Bank of England’s chief economist, Andy Haldane, is visiting Yorkshire and the Humber. Haldane’s speeches are always good value (remember the one about the dog chasing the frisbee?), so we’ll be scrutinising this one closely.

The agenda:

• 9.30am BST: UK public finances for May released
• 11.30am BST: Queen’s Speech
• 12pm BST: Bank of England’s Andy Haldane speaks in Yorkshire
• 3pm BST: US home sales
• 3.30pm BST: US crude oil inventory figures