Crude Prices Extend Losses on Global Glut, Greece Woes

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Crude Prices Extend Losses on Global Glut, Greece Woes

Crude prices ended lower for the third straight day in volatile trading, weighed down by uncertainty over the Greek Debt crisis and the energy market shifted focus to the oil glut.

Light sweet crude for July delivery ended 44 cents or 0.7% lower at $59.52 a barrel on the Ne2w York Mercantile Exchange.

Brent for July delivery, which expired as the front month contract at the end of the session, ended $1.26 or 2% lower at $62.61 a barrel on the London based ICE Future Exchange.

“Traders seem to be losing hope that the strategy of [Organization of the Petroleum Exporting Countries] is successfully stealing market share from competitors—even as U.S. oil rig counts continue to plummet,” Matt Smith, director of commodity research at ClipperData, told Market Watch

Crude prices tracked losses in the major equities after talks between Greece and its international creditors broke down over the weekend barely an hour after they had started increasing speculation over a possible default and exit from the Eurozone.

The volatility increased the value of the dollar against a basket of foreign currencies. A stronger dollar is bearish for the demand of commodities denominated in dollars like oil as it makes them expensive for holders of foreign currencies.

Also weighing on crude prices was a report by price reporting agency Platts Inc saying that the Organization of Petroleum Exporting Countries had raised its output levels to 31.1 million barrels a day-more than 1 million barrels a day above its quota.

This is the highest level of production by the cartel, which produces about a third of the world’s total crude supply, since October 2012.

Output by Saudi Arabia and Libya has grown with Iran also expected to increase its exports as soon as economic sanctions on it are lifted.

“Sentiment this morning gets a bearish touch from negative equities, a dollar to the strong side, Greek concerns and news of some increase in Libya oil production,” Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo, told Reuters.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com