Oil prices tumble further before US energy report

5th November 2014, Comments 0 comments

Oil prices sank further Wednesday, with Brent striking another four-year low on the back of the rebounding dollar, as traders awaited US energy stockpiles data.

Brent North Sea crude for delivery in December dropped 32 cents to $82.

50 a barrel in London midday deals.

It had earlier hit a four-year low at $81.

63.

US benchmark West Texas Intermediate for December slid one cent to $77.

18 a barrel compared with Tuesday's closing level.

"Crude oil prices extended losses.

as the strong dollar added further pressure to the oil market following yesterday's sharp declines," said Sucden brokers analyst Myrto Sokou.

The dollar rallied after Republicans cruised to victory in US midterm elections overnight, dealing a blow to President Barack Obama and his fellow Democrats.

The oil market tends to fall on the back of the stronger greenback, because it makes dollar-denominated crude more expensive for buyers using weaker currencies.

Crude futures also plunged this week after key producer Saudi Arabia cut its prices for crude sold to the US market.

In reaction on Tuesday, Brent began striking four-year lows, while WTI nosedived to a three-year nadir at $75.

84.

Analysts saw the Saudi move as an effort to hold onto market share in North America against cheaper oil flooding in from US shale fields.

Oil traders are meanwhile awaiting the US government's official weekly stockpiles report on Wednesday for the week ending October 31.

"Investors will next be looking to the US stockpiles report for an idea on how much supply is outstripping demand in a global market quite flush with supply," Desmond Chua, market analyst at CMC Markets in Singapore, told AFP.

Crude reserves in the world's biggest economy likely rose 2.

2 million barrels last week, according to analysts polled by Dow Jones Newswires.

Gasoline stockpiles are expected to have fallen by 300,000 barrels, while stocks of distillates including heating oil and diesel likely fell by 1.

8 million barrels.

Daniel Ang, investment analyst at Phillip Futures in Singapore, said "markets are still recovering from the unexpected shock from Saudi Arabia's price cuts".

Analysts say the move by Saudi Arabia, kingpin of the OPEC oil-producing cartel, is an effort to hold onto market share in North America against cheaper oil flooding in from US shale fields.

Ang said prices are facing continued downward pressure with the Saudi price cut seen to be "just the beginning" and other leading OPEC producers likely to follow suit.

The 12-nation Organization of the Petroleum Exporting Countries (OPEC) will deliberate on whether to trim its current output of about 30 million barrels per day in a meeting in Vienna on November 27.

burs-rfj/bcp/rl.


© 2014 AFP

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