On Thursday, futures for crude oil drifted lower, pushing Brent crude further into the bear territory a day after the highlight of global economic growth concerns by the Federal Reserve.
November delivery light sweet crude futures on the New York Mercantile Exchange dropped 0.4% or 37 cents to $86.94, the lowest level from June 2013. November delivery Brent crude on ICE Futures exchange in London set a low of trading at $90.82, down 1.1% or 97 cents.
Minutes from the Fed showed the concern of officials on the impact the strengthening US dollar could have on the economy. The concerns saw the dollar decline but failed to respite oil after it gained ground, as reported by Market Watch.
Dollar-priced commodities are expensive to traders using different currencies when the dollar is strong.
Price Futures Group market analyst, Phil Flynn said, ‘The minutes pushed back interest increase expectations and sent stocks and the euro soaring and dollar back down. Yet even with a break in the dollar, oil falls as demand fear grow.”
On Wednesday, the US Energy Information Administration said that there was a rise of 5 million barrels in domestic oil inventories to 361.7 million.
Increased US production of oil has reduced oil prices, which has reduced the need for imports and thus slowing China’s growth. China and the US are largest global consumers of crude oil.
NASDAQ reported that oil companies are falling as crude declines. Chevron dropped 0.3% and Royal Dutch Shell declined 2.6% while BP fell 1.6% in New York.
Brent prices have declined for six of the last seven trading sessions and oil bulls are hoping that excess supplies will be balanced out in the Organization of Petroleum Exporting Countries meeting scheduled for November.
In its latest report, US EIA said, “Although the return of significant Libyan production has been an important factor putting downward pressure on the Brent price, weakening global demand, particularly in Europe and Asia, is also important.”