US Brent and crude oil traded in different directions on Friday as prices were kept down by a sell off ahead of the expiration on Monday. OPEC discussions on cutting output added strength into the overseas market.
With the crude trading lower, traders and analysts said that most of the sell off in the contract of WTI resulted from long positions’ liquidation before the Monday expiration.
Brent saw several rallies in the day and pushed the arbitrage to $6.74 between two grades, the widest from September 8.
According to Reuters, US crude dropped 66 cents to $92.41 per barrel and Brent gained 69 cents to $98.39 per barrel.
Oil Outlooks chief executive officer, Carl Larry said, “I think overall talk about OPEC cutting back production is giving some strength on Brent. The cuts are inevitable but who and how. On the US side, WTI has been under pressure because people are moving into maintenance season.”
Analysts said that the money flowing from commodities into equities has led to poor trading I the day.
The Wall Street Journal quoted Tyche Capital Advisors managing member, Tariq Zahir as having said, “The US dollar is helping the crude market go down.” He added that he has been betting on low prices of oil.
The dollar traded in new multiyear highs against the other basket currencies on Friday due to potential of increase of US interest rates in future. Since oil is traded in dollars, it is more expensive for buyers to purchase oil in other currencies.
Price Futures Group analyst, Phil Flynn said, “What we’re seeing is a situation where everybody is concerned about the demand side of the equation and oversupply. Let’s face it, the market is very heavy right now.”
Flynn added, “The concerns previously about war and political risk have faded. Also with the Fed talking about raising interest rates, you’re creating this huge upwards momentum in the dollar.”
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