Brent crude fell as much as 1.4 per cent at $57.06 per barrel
31/12/2014 06:18 AST
Crude oil fell to its lowest level in more than five and a half year on Tuesday, triggering another bout of selling in illiquid equities markets around the world.
Brent crude fell as much as 1.4 per cent at $57.06 per barrel, before trading 0.69 per cent lower at $57.48 per barrel in early morning US trading.
“Having seen the lack of support from the disruptions in Libya, traders have resumed selling as they positions themselves for further falls in January. A very weak fundamental outlook has left sellers firmly in control,” Ole S Hansen, head of commodity strategy at Saxo Bank told Gulf News.
“Very low liquidity is making it very easy to push it lower,” Hansen said.
Oil has slumped 46 per cent this year, set for the biggest annual decline since 2008, as the highest US production in more than three decades contributed to a global surplus estimated by Qatar at 2 million barrels a day.
Saudi Arabia, which is steering the Organisation of Petroleum Exporting Countries to resist cutting output, has said it’s confident that prices will rebound as economic growth boosts demand.
“I see a consolidation in crude oil. Crude may trade in the range of $50-60 for time being,” said Pradeep Unni, senior relationship manager at Richcomm Global Services.
More weakness:
“I think we could see some additional weakness early on in crude, also because the dollar is likely to continue its ascent during the first quarter,” said Saxo Bank’s Hansen.
“Overall a quarter where the market will try to stabilise after some early weakness. On that basis I see Brent crude trading between 55 and 65 with the risk of reaching 50 early on,” said Hansen.
Higher crude supplies may also weigh on sentiment.
US crude inventories have risen to almost 13 per cent above the five-year average level of 343.1 million barrels for this time of year, according to the Energy Information Administration.
Production expanded to 9.14 million through Dec. 12, the most in weekly data that started in January 1983, said the Energy Department’s statistical arm. The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, or fracking, which has unlocked supplies from shale formations.
$1.3 trillion erased:
Almost $1.3 trillion was erased from the value of equities worldwide this month amid the slump in oil prices.
In the United States, the Dow Jones Industrial Average was down 0.09 per cent at 18,038.23 at 6.08pm.
“Dow index would consolidate in this area before going up to test resistance at 18,478. I expect a new high during next month because Dow Jones would close 2014 in historical high,” Osama Al Ashri, member of British organisation, Society of Technical Analysts.
S&P still may approach resistance or its new target of 2,127 by next month, said Al Ashri.
US GDP surged by 5 per cent in the third quarter, expanding at the fastest pace since the same period of 2003, as US consumers and businesses spent more than previously estimated. Falling oil and natural gas prices helped bolster expectations for stronger consumer spending heading into next year.
In Europe, EURO STOXX 50 price was down 1.18 per cent at 3,147.56. The stock-benchmark index fell 1.5 per cent this month, heading for its first December decline since 2008. It’s advanced 4.3 per cent this year.
The CAC 40 index in France was down 1.05 per cent lower at 4,272.65.
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