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Oil drops as glut woes return

Wednesday, November 18, 2015 - 07:05
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World oil prices dropped on Tuesday after Monday's one-off gain as supply forces continued to dominate the market.

[NEW YORK] World oil prices dropped on Tuesday after Monday's one-off gain as supply forces continued to dominate the market.

Moderate autumn temperatures in the United States have raised expectations for another increase in US commercial crude stockpiles in the country this week, keeping the downward pressure on prices.

Another rise in the dollar also crimped trade as it hit buyers using other currencies.

In New York trade, US benchmark West Texas Intermediate for delivery in December was down US$1.07 at US$40.67 per barrel.

In London trade, Brent North Sea crude for January delivery slid 99 cents to US$43.57 a barrel.

After gains on Monday, the first trading day after the deadly attacks in Paris, "we're back on the supply side of the picture, we're seeing a stronger dollar as well,' said Matt Smith of ClipperData.

Prices have fallen steadily since November 5, mostly driven by signs that major producers were not cutting back, and by mounting stockpiles especially in the United States, in part due to the persistently mild fall weather.

"Today, traders are realizing that fundamentally nothing has changed," said Gain Capital analyst Fawad Razaqzada.

He said the French bombardment of IS (Islamic State) targets was mainly away from most major oil terminals "and therefore they are unlikely to cause any actual disruptions to supply." "So, oil prices continue to remain depressed by the still-high supply of the stuff and weaker demand prospects," he said.

The US Department of Energy will release its regular weekly oil inventories report on Wednesday.

AFP

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