Market Close: Dec 10 Down
Dec 10th, 2014 by loren
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Crude-oil futures on Wednesday ended at a fresh five-year low Wednesday, dragged down by a surprise inventories increase and news the Organization of the Petroleum Exporting Countries cut its 2015 demand expectations for crude.
Light, sweet crude for delivery in January declined $2.88, or 4.5%, to settle at $60.94 a barrel on the New York Mercantile Exchange. That was oil’s lowest settlement since July 2009. January Brent crude slid $2.60, or 3.9%, to $64.24 a barrel on London’s ICE Futures. That was Brent’s lowest settlement since July 2009 as well.
The U.S. Energy Information Administration said Wednesday oil inventories rose by 1.5 million barrels in the week ending Dec. 5. Analysts had expected a decrease in supplies of around 3 million barrels. The EIA also said gasoline supplies rose by 8.2 million barrels, and supplies of distillates, which include heating oil, rose by 5.6 million barrels. An overhang of oil due to rising U.S domestic oil production and expectations of slack demand for crude have been blamed for a sustained fall in crude-oil prices. OPEC said earlier Wednesday it sees less demand for its own oil in 2015. It predicts that demand for OPEC oil would drop to 28.9 million barrels a day next year, compared with 29.4 million barrels a day in 2014.
In its latest monthly report, OPEC said crude production from member countries declined by 390,100 barrels a day to 30.05 million barrels a day in November, compared with October. OPEC’s demand forecast has further unbalanced the supply and demand equation for oil said Naeem Aslam, an analyst with Avatrade, in an email Wednesday. The sell off in oil markets accelerated sharply in late November when OPEC said it wouldn’t cut its production levels to arrest the fall in prices. “For as long as OPEC continues to refuse to do its bit to curb this oversupply, non-OPEC producers will have to do the lion’s share to re-balance the market,” analysts at Commerzbank said in a note to clients. “Low prices are required to force this to happen. It is therefore all but impossible to tell where the oil price might bottom out.”