US oil plunges over 3 pct on strong dollar, supply glut

23 Nov 2015 | Author: | No comments yet »

Crude Prices Fall; $40 Per Barrel ‘Very Possible’On Friday, oil prices turned higher after industry group Baker Hughes BHI 0.28 % reported that the U.S. oil rig count fell by 10, sparking some optimism that oil production in North America is tapering down. However, analysts say market participants remain nervous that oil majors, particularly those in the Organization of the Petroleum Exporting Countries, will continue to ramp up output amid low prices for the sake of defending market share. On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $41.09 a barrel at 0335 GMT, down $0.81 in the Globex electronic session.

January Brent crude on London’s ICE Futures exchange fell $0.49 to $44.17 a barrel. “A fall below $40 per barrel[for West Texas Intermediate] is very possible and real,” said Barnabas Chen, an OCBC commodities analyst who said traders are mostly in a cautious mode as they expect the global supply glut to worsen next year due to expanding oil stockpiles. “At 487.3 million barrels, U.S. crude oil inventories remain near levels not seen for this time of the year in at least the last 80 years,” said the official report. “The OPEC factor has been mostly priced in but when the sanctions against Iranian oil are fully lifted, we might see another price collapse,” said Daniel Ang, a Phillip Futures energy analyst. This week, analysts will be taking cues from U.S. economic indicators such as manufacturing data, weekly jobless claims, and a forecast for third-quarter gross domestic product. Nymex reformulated gasoline blendstock for December–the benchmark gasoline contract–fell 48 points to $1.2855 a gallon, while December diesel traded at $1.3596, 117 points lower.

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