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NYMEX Crude $ 41.71 DN $1.3300
NY Harbor ULSD $1.3524 DN $0.0503
NYMEX Gasoline $1.3905 DN $0.0056
NEWS
Oil prices settled sharply lower Friday, pressured by a stronger dollar and the global oversupply of crude still clouding the outlook for the industry.
Weak industrial data from China and a regulatory crackdown on Chinese stockbrokers also put pressure on the commodity, as fears about oil demand resurfaced. On the New York Mercantile Exchange, West Texas Intermediate futures fell $1.27, or 3.2% to $41.71 a barrel.Brent crude the international oil benchmark, finished 1.6% lower at $45.46 a barrel on London’s ICE Futures Exchange. Trading volumes were thinner than usual as most financial markets were open for half a day.
The dollar strengthened on Friday and pressured commodities such as oil, which are priced in the U.S. currency. The ICE Dollar Index which tracks the dollar against a basket of rival currencies, rose 0.2% to above 100 by midday Friday. Geopolitical tensions after Turkey shot down a Russian jet along the Syrian border pushed prices up this week, but there is little indication so far the turmoil in the Middle East is affecting oil supply. Over the week, WTI futures were down 0.6%. “The potential increase in geopolitical risk premium has faded a bit as the dispute between Russia and Turkey has not yet escalated or spread to the surrounding countries, affecting oil output,” said Michael Poulsen, oil analyst at Global Risk Management.
Oil prices headed south last year after the Organization of the Petroleum Exporting Countries embarked on a strategy of protecting its market share by pumping more crude despite falling prices. While booming U.S. output has tailed off this year, oil stockpiles remain near record highs. “Inventory overhangs dominate the oil markets and will likely suppress oil prices in the near-term as we approach [December] OPEC meeting in Vienna,” said Jason Gammel, analyst at Jefferies. “Crude and product inventories are building in the U.S. with the market expected to remain oversupplied through the first half of 2016.”
Earlier this week, the U.S. Energy Department said crude stockpiles ticked up by 1 million barrels last week, bringing the total tally to 488.2 million barrels, around a level not seen in the last eight decades. U.S. oil output has also held stable, around 9.2 million barrels a day, but down from a peak of 9.6 million barrels a day in April. “Oversupply issue will be exacerbated by Iranian oil coming to market soon,” said Phil Flynn, senior market analyst at the PRICE Futures Group. “Oil market oversupply will continue through next year, due to resilient U.S. production, even if it is declining, and high OPEC output led by Saudi Arabia and Iraq,” said Michael Wittner, chief oil analyst at Société Générale. Wittner said he doesn’t believe there will be “any change in Saudi or OPEC policy,” when the 12-nation oil cartel meets in December.