Oil Prices Fall to One-month Low
Oil futures fell Thursday, with the U.S. benchmark trading at its lowest in energy commodities since Aug. 4. The U.S. dollar bounced and worries remained over the outlook for demand.
West Texas Intermediate crude for October delivery CL.1, -2.10% on the New York Mercantile Exchange fell 98 cents. This was 2.4%. to trade at $40.53 a barrel.
November Brent BRNX20, -2.05%, the global benchmark, declined 96 cents. That’s 2.2%, to $43.47 a barrel on ICE Futures Europe.
Data showing a fall in gasoline demand was blamed in part for crude’s fall on Wednesday. This was despite a large drop in oil inventories.
Meanwhile, for commodities, a rebound by the U.S. dollar limited upside. Oil had previously found support as the ICE U.S. Dollar Index DXY, 0.02%.
This was a measure of the U.S. currency against a basket of six major rivals.It fell to a more-than-two-year low earlier in the week.
The macro picture has started to send more mixed signals to the oil market. This was with strength in equity markets more and more concentrated on a few indices/industries.
Moreover, key government bond interest rates were trending lower and the U.S. Dollar index in rebound mode. This was after the EUR/USD exchange rate hit the $1.20 level two days ago, wrote JBC Energy analysts.
A weaker dollar can be beneficial to commodities. They become less expensive to users of other currencies. A stronger dollar can put pressure on prices of commodities.
Oil: The OPEC+ Agreement
Weakness was also attributed to a report that Iraq may seek a two-month extension to its deadline. That is for implementing additional production cuts as part of the OPEC+ agreement.
Iraq and other countries had overproduced their quotas earlier this summer. They are required to make deeper cuts to compensate.
In commodity news, October gasoline RBV20, -1.86% fell 1.4% to $1.1852 a gallon. October heating oil HOV20, -3.09% declined 3% to $1.1529 a gallon.
October natural gas NGV20, 1.93% was up 1.3% to $2.518 per million British thermal units.
