Oil market strikes new low

3rd October 2014, Comments 0 comments

Global oil prices dived Friday to a fresh low point on plentiful supplies, and as the dollar rallied against the euro following strong US payrolls data, analysts said.

Brent North Sea crude for delivery in November slumped to $91.48 a barrel, which was last witnessed in late June 2012. It later stood at $91.85, down $1.57 from Thursday's close.

US benchmark West Texas Intermediate for November shed $1.34 to $89.67 per barrel.

"Supply issues and a stronger dollar continue to take a bite out of crude prices," said CMC Markets analyst Jasper Lawler.

The dollar rallied on news that a strong 248,000 net new positions were created in the United States in September, beating analyst expectations of 210,000 jobs after a disappointing 142,000 in August.

The US unemployment rate meanwhile fell to 5.9 percent, the lowest level in six years.

In reaction, the European single currency dived on Friday to $1.2501, its lowest level since late August 2012.

A stronger greenback makes dollar-priced commodities more expensive for buyers using weaker currencies, which tends to dent demand and push prices lower.

US jobs figures are closely watched by crude investors for clues on the state of economic recovery and demand in the world's top oil consumer.

- Riyadh rocks market -

Oil also slid Thursday after Saudi Arabia, the biggest crude producer in the OPEC cartel, announced lower prices for the fourth straight month in a bid to hold onto market share.

New York crude had tumbled Thursday to $88.18 -- a level last seen in April 2013.

The market was also weighed down by concerns about a glut of global supplies, which have overshadowed ongoing geopolitical jitters in key oil-producing regions.

"Despite unresolved geopolitical tensions in Russia, Iraq and Syria, Brent prices have steadily declined over the last two months, as the combination of strong North American production growth, weak global demand growth and lower OPEC disruptions led to a build in petroleum inventories," wrote Goldman Sachs analysts in a market report.

In the third quarter of 2014, both Brent and New York oil prices have shed approximately 15 percent of their value, hit by the weak outlook for global energy demand.

- Supply concerns before OPEC -

"Global concern over declining economic growth and waning demand combined with a robust supply continue to weigh on the global oil market," added Inenco analyst Dorian Lucas.

"Current ambivalence between OPEC members regarding the necessity of a supply cut will continue to remain under scrutiny leading up to the group's next meeting in November.

"Many OPEC members are calling for a revised output target going forward in an attempt to stabilise prices,

"However core gulf members remain defiant in the belief that winter demand will see a revival in the market."

The Organization of the Petroleum Exporting Countries (OPEC), which pumps a third of global crude, will hold its next output gathering on November 27 in Vienna, which is home to the oil producers' cartel.

Back in June, OPEC agreed to keep production at 30 million barrels a day, saying in a statement that while oil demand was picking up, downside risks to the global economy remain unchecked.

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© 2014 AFP

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