Crude settles lower amid volatile equity session

Crude futures plunged ahead of the market settle Thursday as equity markets tested session lows in midafternoon trading.

ICE February Brent settled $2.31 lower at $52.16/b and NYMEX February WTI was down $1.61/b at market close.
US stock indexes, which had been trading lower throughout Thursday's session, plunged to fresh lows just ahead of the market settle. The Dow Jones Industrial Average was down roughly 1.6% in the final minutes of oil trading on Thursday.

But oil price declines slowed in after-market trading as equity markets trended toward even later in the afternoon.

The outsized declines in Brent prices narrowed the contract's premium compared with US grades. The ICE WTI/Brent spread fell to around minus $7.60/b at market settle, putting the contract on pace to close at the narrowest spread since August.

A pullback in US drilling and permitting activity could portend a slowdown in US production in 2019.

The US rig count fell to its lowest level since April last week, declining by 28 to 1,147, amid a broad slowdown in oil drilling activity, according to S&P Global Platts Analytics.

The bulk of the drilling pullback was seen in the number of rigs chasing oil, which fell 28 to 908, in an early sign that US oil markets are stumbling amid sustained lower oil prices.

But increasing efficiencies may preserve US output even as top-line rig counts decline. Earlier this month, two major independent Permian Basin operators - Parsley Energy and Diamondback Energy - announced they would slash rig counts and capital expenditure budgets in 2019, but the companies also forecast their 2019 production would grow 20% and 28% compared with 2018 levels, respectively.

The US Energy Information Administration forecasts Permian Basin production will grow 73,000 b/d month on month to 3.8 million b/d in January amid a 15,000 b/d uptick in new well production per rig to 616 b/d.

NYMEX January ULSD settled down 5.53 cents at $1.6783/gal and NYMEX January RBOB fell 2.64 cents to $1.3040/gal at market settle.