Oil prices resume rout as fundamentals remain bearish

on Dec 10, 2014

iNVEZZ.com, Friday, December 5: Prices of crude oil futures have resumed their decline so far in today’s trading as market participants booked profits and the US dollar stabilized, following the sell-off in the currency during the previous session. An Iranian oil official warned that the country sees crude falling to $40 should any divisions in OPEC emerge.

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Brent futures for January delivery had shed 0.9 percent, or 60 cents, to $66.24 as of 07:05 GMT on the London-based ICE Futures Europe exchange. Yesterday, the contract managed to snap a five day losing streak after closing 0.35 percent up to $66.84.
Phin Ziebell, a senior analyst at National Australia Bank was quoted by Reuters as saying that notwithstanding day-to-day movements the fundamental outlook has remained unchanged, with supply outpacing demand growth for most of the year. In his view: “It’s an incessant march downwards, and it would be interesting to see where it bottoms out, but there doesn’t seem to be any sign of it so far.”
Mohammad Sadegh Memarian, head of petroleum market analysis at the Iranian oil ministry, said at a conference in Dubai yesterday that “any break in OPEC solidarity or price war will lead to an enormous price dive shock” which would push prices to $40 or $50. According to him, the drop to less than $80 is already below market equilibrium.
January WTI futures had fallen 66 cents, or over one percent, to $63.16 in electronic trading on the NYMEX in New York as of 07:05 GMT. Market participants will be eyeing the weekly inventory report from the US Energy Information Administration (EIA) due later today. A Bloomberg News poll has it that crude inventories shrank by 2.7 million barrels in the seven days ended 5 December.
Based on the two front month contracts, Brent was trading at a premium of $3.08 to WTI as of 07:05 GMT, six cents up from yesterday’s $3.02 close. Last Wednesday the premium ended at $2.54.


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