Light, sweet oil for December delivery recently fell $1.38, or 1.7%, to $79.63 a barrel on the New York Mercantile Exchange, the lowest intraday price since June 2012. The U.S. benchmark price has dipped below the psychologically important $80-a-barrel level in intraday trading several times this month, but it has always bounced back.
Brent recently traded down $1.31, or 1.5%, to $84.82 a barrel on ICE Future Europe.
Oil prices have plummeted in recent months on concerns that a continuation of abundant supplies are outweighing demand. The PHLX Oil Service Index was down nearly 4% to 235.63 in morning trade, while oil and energy services segments were the main laggers in the markets, both down 3% or more. Oil and energy companies were among the largest percentage decliners in morning trade. Parsley Energy was down 10.34%, Laredo Petroleum fell 9.94% and Goodrich Petroleum was down 9.22% on the NYSE. Large decliners on the Nasdaq were Rex Energy down 10.11%, PDC Energy down 10.09% and Patterson-UTI Energy down 9%.Market participants are watching the Organization of the Petroleum Exporting Countries for signs of whether the oil-producing cartel will collectively cut production to raise prices. The group’s next meeting is slated for Nov. 27. So far, Saudi Arabia, the largest OPEC producer, has indicated that it is comfortable with lower prices. OPEC "will no longer act as the first-mover swing producer,” Goldman said in its note. "Accelerating non-OPEC production growth outside North America will outpace demand growth, leaving the oil market oversupplied.” Other major banks have lowered their oil-price forecasts recently, including Citigroup and Deutsche Bank .
Deutsche Bank cut its forecasts in a note released Friday to 2015 annual averages of $88.75 a barrel for Brent and $80.50 a barrel for the U.S. benchmark.
”We view the supply-demand landscape as fundamentally weak through the end of 2016,” the bank said. "Our expectation of a strengthening U.S. dollar…would also tend to indicate long-term downward pressure on oil prices.”
A stronger dollar makes oil, which is traded in dollars, more expensive to buyers using foreign currencies.
November reformulated gasoline blendstock, or RBOB, recently fell 3.28 cents, or 1.5%, to $2.1489 a gallon.
November diesel slid 2.84 cents, or 1.1%, to $2.4535 a gallon.
(WSJ)
