Crude oil sinks as Saudi Arabia said to seek production increase

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Crude oil prices plunge nearly 5% Monday following a Wall Street Journal report that Saudi Arabia and other oil producers are discussing a production increase of as much as 500K bbl/day for next week's OPEC+ meeting.

The move would come a day before the European Union has said it would impose an embargo on Russian oil and the G-7's plan to launch a price cap on Russian crude sales, potentially taking petroleum supplies off the market.

Crude futures already were trading around their lowest levels since late September, with rising COVID-19 cases in China causing further worries about global demand.

WTI December crude (CL1:COM) -4.9% at $76.14/bbl while January Brent crude (CO1:COM) -4.8% at $83.41/bbl.

ETFs: (NYSEARCA:USO), (UCO), (BNO), (SCO), (USL), (DBO), (USOI), (NRGU), (NYSEARCA:XLE), (XOP), (VDE), (OIH), (CRAK), (DRIP), (GUSH)

Energy stocks dominate Monday's biggest S&P 500 losers: Halliburton (HAL) -7.1%, Diamondback Energy (FANG) -6.7%, Marathon Oil (MRO) -5.6%, APA Corp. (APA) -5.5%, Schlumberger (SLB) -5.5%, Devon Energy (DVN) -5.3%, Hess (HES) -5%, Pioneer Natural Resources (PXD) -4.5%, EOG Resources (EOG) -4.5%, Occidental Petroleum (OXY) -4.4%, Baker Hughes (BKR) -4.2%, Targa Resources (TRGP) -4.1%, ConocoPhillips (COP) -4.1%.

Any production increase would mark a partial reversal of last month's OPEC+ decision to cut output by 2M bbl/day that angered the U.S.

But talk of a production hike began to emerge last week after the Biden administration told a federal court judge that Saudi Crown Prince Mohammed bin Salman should have sovereign immunity from a U.S. federal lawsuit related to the killing of Saudi journalist Jamal Khashoggi.

This would be an unusual time for OPEC+ to consider a production increase, with global oil prices falling 10% last week.