Oil continued its losing streak for the fourth month in a row on Friday with prices dropping as the US dollar gained due to the Japan monetary stimulus, weighing on the crude market already suffering from abundant supply.
US crude dropped briefly below $80 before it pared losses later in the day and short sellers closed books and took profits.
The pressure came from the indication by monthly surveys that the Organization of the Petroleum Exporting Countries (OPEC) made not move to control production this month despite oil prices extending to a low of four years.
According to Reuters, October output for OPEC dropped by 120,000 barrels a day. Nigeria and Angola led the downtick with the overall production of OPEC hovering 720,000 barrels a day, above the target of 30 million barrels a day.
Brent and US crude dropped nearly a dollar, putting them on track for the steepest decline in a month since May 2012.
US crude dropped 58 cents at $80.54 a barrel after losing 11.6% on the month. December Brent dropped 38 cents to $85.86 adding to the 9% monthly loss.
Bloomberg quoted Tradition Energy senior analyst, Gene McGillian as having said, “Fears of a supply glut and slow economic conditions continue to weight on the market. The bears are in control and the market continues to come under pressure.”
Tariq Zahir, fund manager at Tyche Capital Advisors said, “We still have the same production issues that have been weighing on the market. We are producing so much oil that Saudi Arabia has lost the ability to talk up the market.”
Iraq, Iran, Saudi Arabia and Kuwait have cut export prices this month, fueling speculations that they might compete for market share.
Vice chairman of HIS Inc., Daniel Yergin said, “The Saudis on a regular basis adjust their prices, but this one loomed larger. The message is that ‘we’re not going to lose market share to Iraq, Iran or other countries. We are going to be competitive.’”
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of the story: Jonathan Millet at email@example.com