Monday, December 8, 2014

Brent oil futures crash to lowest since October 2009

Brent oil futures crash to lowest since October 2009

CommoditiesDec 08, 2014 02:22PM GMT Add a Comment
© Reuters.  Brent oil futures extend sell-off to hit lowest since October 2009 © Reuters. Brent oil futures extend sell-off to hit lowest since October 2009 - Brent oil futures tumbled to the lowest level since 2009 on Monday, as concerns over the global economic outlook and the impact on future oil demand prospects continued to dampen the appeal of the commodity.

On the ICE Futures Exchange in London, Brent oil for January delivery fell by as much as 3.28% to touch a session low of $66.80 a barrel, the weakest level since October 2009, before trading at $67.19 during U.S. morning hours, down $1.89, or 2.73%.

On Friday, London-traded Brent prices lost 57 cents, or 0.82%, to settle at $69.07 a barrel.

Data released earlier showed that China’s exports climbed 4.7% from a year earlier in November, missing expectations for a 7.9% increase, while imports fell 6.7%, compared to forecasts for a gain of 3.5%.

The country's trade surplus widened to $54.5 billion last month from $45.4 billion in October, compared to estimates for a surplus of $43.2 billion.

Separately, revised data showed that Japan's economy shrank by an annualized 1.9% in the third quarter, more than the preliminary estimate of a 1.6% decline.

On a quarter-over-quarter basis the economy contracted by 0.5% in the three months to September, compared to a preliminary estimate of a 0.4% contraction.

Wall Street investment bank Morgan Stanley cut its price forecast for Brent crude to $70 from $98 and for 2016 to $88 from $102.

"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," the bank said in a report on Monday.

Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in January dropped $1.38, or 2.09%, to trade at $64.47 a barrel, after hitting a daily low of 64.11.

Nymex oil futures declined 97 cents, or 1.45%, on Friday to end at $65.84 a barrel. Prices hit $63.72 on December 1, a level not seen since July 2009.

The US dollar index, which measures the greenback against a basket of six major currencies, traded near the strongest level since March 2009, as upbeat U.S. employment data added to expectations that the Federal Reserve could raise interests sooner and faster than previously expected.

Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.

London-traded Brent prices have fallen nearly 42% since June, when it climbed near $116, while WTI futures are down almost 40% from a recent peak of $107.50 in June.

Saudi Arabia’s state-run oil company lowered official selling prices for its crude in January last week to the lowest in at least 14 years for buyers in the U.S. and Asia.

The move suggested that the kingdom is stepping up a battle for market share with cheaper U.S. shale oil after last week's OPEC decision to keep production quotas unchanged.

The Organization of Petroleum Exporting Countries said on November 27 that it would maintain its output target at 30 million barrels a day, disappointing hopes the oil cartel would lower production to support the market, as a surplus develops amid the shale boom in the U.S., which is pumping at the fastest pace in more than 30 years.

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