On Monday, prices of oil dropped after the one-day rally with Japan, the fourth largest importer of crude falling into recession and the OPEC meeting nearing without agreements to cut the production.
The strength of the dollar against the euro, yen and other currencies weighed on oil prices.
According to Reuters, the benchmark Brent crude’s contract for the front month dropped 80 cents to $78.61 per barrel after dropping $1.47 earlier to a $77.94 session low.
Front month US crude was 66 cents lower to $75.16 per barrel after a $74.71 session bottom.
President of Lipow Oil Associates, Andrew Lipow said, “Arguably, the Japanese recessions is pulling everything down, crude included. But the oil market has another and bigger problem: that the OPEC meeting will come and go without any change in production.”
Nasdaq reports that Japan’s economy dropped 1.6% in Q3 following a decline of 7.3% the previous quarter. Economists had forecast an increase of 2.3%.
Crude traders are waiting for clear signs that the Organization of the Petroleum Exporting Countries’ meeting of November 27 will act to reduce the glut caused by abundant production in shale oil.
Saudi Arabia finance minister, Ibrahim Alassaf, reinforced speculations on Monday that the largest oil exporter of OPEC would not cut supplies when he said the plunge in prices of oil has no direct impact on government spending on the kingdom’s budget next year.
The oil minister of Iran accused some OPEC members for making up excuses not to lower production.
Prices of Brent have fallen around 30% since the above $115 June high amid concerns on oversupply. On Friday, the market rose almost $2 per barrel, the largest climb in three weeks as support emerged after price hit lows of four years at below $80.
Saxo Bank senior commodity strategist, Ole Hansen said, “We are fast and furiously giving away most of the gains we had on Friday.”
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