Moneycontrol
Get App
Last Updated : Oct 21, 2016 08:22 AM IST | Source: Reuters

Oil prices stable as strong dollar weighs, tighter market looms

The dollar rose to its highest level since March against a basket of other leading currencies on Thursday, potentially crimping demand as fuel becomes more expensive for countries using other currencies.


Oil prices were stable on Friday, weighed down by a stronger dollar but supported by signs fuel markets are balancing after two years of oversupply.

The dollar rose to its highest level since March against a basket of other leading currencies on Thursday, potentially crimping demand as fuel becomes more expensive for countries using other currencies.


US West Texas Intermediate (WTI) crude was trading at USD50.62 a barrel at 0050 GMT, 1 cent below its last settlement.


International Brent crude oil futures were up 3 cents at USD51.41 per barrel.

Close

Crude prices fell over 2 percent the previous session on the back of the soaring dollar.


Despite the falls, overall sentiment in oil markets was confident as financial investors are still keen to pour more money into crude futures, and there are also mounting signs of a tightening physical oil market.


"The near term fundamentals in the oil market have turned positive. Demand is stabilizing, OPEC production has peaked (and will fall if cuts are implemented), and global inventory declines imply that the market is more balanced than many believe," Neil Beveridge of Bernstein Energy said in a note to clients.


The Organization of the Petroleum Exporting Countries (OPEC) plans to implement a 0.5 to 1 million barrels per day production cut after a meeting on Nov. 30.


OPEC's current output stands at a record 33.6 million barrels per day.


Bernstein's Beveridge said that due to OPEC's cuts and general market conditions, he was "forecasting a return to USD60 per barrel in 2017 and USD70 per barrel in 2018", adding that even higher prices would be prevented by rising production outside OPEC.


"Ultimately, a rise in US production (and non-OPEC supply more broadly) will cap the recovery in price," he said.

US crude oil production has fallen almost 12 percent since peaks in 2015, to around 8.5 million barrels per day, but rising drilling activity has slightly lifted output again in recent weeks, in what some analysts say are early indicators that the US shale industry has adapted to lower prices and can operate at around USD50 per barrel.



Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Oct 21, 2016 08:22 am
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant