Brent crude falls below $90, WTI at 17-month low
Crude oil prices continued to decline amid ongoing worries about slowing demand and ample supplies. Brent crude for November delivery on London’s ICE Futures exchange dropped below $90 a barrel for the first time in a year on Oct. 9. Brent fell as low as $89.16 a barrel before trimming some of the losses. The contract settled the previous day’s trade at $91.38, it weakest close since late June 2012.
West Texas Intermediate, the U.S. crude benchmark, for November finished at $87.31 a barrel on Oct.8, having earlier dipped to $86.83. The Oct.8 settlement marked the lowest settlement since April 17, 2013.
Rising U.S. production amid the country’s shale drilling boom and higher output from the Organization of Petroleum Exporting Countries (OPEC) at a time of weakening global demand is weighing heavily on oil prices, analysts say.
As reported last week, supply from OPEC, which contributes around 40 percent of the world’s crude supply, in September averaged 30.96 million barrels per day, up from 30.15 million barrels in August, according to a Reuters’ survey based on shipping data and information from sources at oil companies, OPEC and consultants. The September output was OPEC’s highest since November 2012 when it supplied 31.06 million barrels.
OPEC’s next meeting is on Nov. 27 in Vienna, where the falling oil prices are expected to trigger a debate on whether output needs to be cut. State-run Saudi Aramco reduced it selling prices to Asian customers on Oct. 1, a clear sign according to analysts that the world’s largest exporter is willing to let prices fall in order to maintain crude market share.
U.S. crude oil production in September was running at its highest level since July 1986, averaging an estimated 8.7 million barrels per day, according to the U.S. Energy Information Administration (EIA) data.
The EIA on Oct. 8 reported the country’s crude oil inventories climbed by 5 million barrels for the week ending Oct. 3 to reach 361.7 million barrels. Gasoline stocks also rose, up by 1.18 million barrels while distillate fuel stocks increased by 439,000 barrels last week, the energy department’s weekly oil status report showed. The market had been expecting gasoline and distillate fuel inventories to have declined.
Because of rising world oil production and falling consumption, the EIA has lowered its 2014 and 2015 price forecasts. WTI is projected to average $94.58 a barrel in 2015, down from a September forecast of $94.67. The Brent crude price outlook, meanwhile, is cut to $101.67 a barrel from $103 last month.
Turning to precious metals, gold fell below $1,200 an ounce for the first time this year on Oct. 3 as the U.S. dollar climbed still higher on the back of better-than expected U.S. non-farm payroll data. The more positive economic data and the consequent prospect that interest rates would be hiked sooner-rather-than later dimmed the appeal of safe-haven investments of assets like gold.
Spot prices on the London bullion market dropped as low as $$1,191 an ounce on Oct.3 and to $1,185 on Oct. 6, marking the precious metal’s weakest level since December 2013. U.S. gold futures on Comex for December settlement also closed at their lowest since last December on Oct. 3 at $1,192.90 an ounce.
However, gold prices were boosted at midweek as the U.S. dollar’s appreciation against the Euro faltered after the minutes of the last Federal Reserve Open Committee meeting held Sept. 16-17 were published, showing the Fed was wary of raising interest rates too soon.
Gold prices had touched their highest level in two weeks in London on Oct. 9 at the time of writing, edging up to as high as $1,233.70 an ounce.
Platinum and palladium were also higher at midweek as investors took advantage of the depressed prices to buy. Platinum futures prices on Comex fell to their lowest since August 2009 earlier this week, with the most-actively traded contract – for January – settling at $1,249.20 a troy ounce on Oct. 6. Palladium fell to $766.10 a troy ounce, the lowest since late March. Both pgms have come under pressure on worries that slowing growth in Europe and China could reduce demand for vehicles. The two metals are used in auto-catalyst converters .
January platinum futures on Comex settled at $1,266.90 a troy ounce on Oct. 8, up more than$40 up on where it ended last week. Palladium finished $41.90 up on last week’s close, settling at $796.45 an ounce.
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