2 Nov 2013

Crude falls on fears of U.S. supply glut, stronger dollar


            Crude Oil prices fell on Friday as U.S. supply concerns continued to overshadow a string of positive U.S. economic indicators suggesting recovery is picking up and will hike demand for fuel and energy.

On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD94.91 a barrel during U.S. trading, down 1.53%. 

The commodity hit a session low of USD94.70 and a high of USD96.65. The December contract settled down 0.40% at USD96.38 a barrel on Thursday.

Oil futures were likely to find support at USD92.73 a barrel, the low from June 24 and resistance at USD98.80 a barrel, the high from Oct. 28.

The U.S. Energy Information Administration said in its weekly report on Thursday that U.S. crude oil inventories rose by 4.1 million barrels in the week ended Oct. 25, well above expectations for an increase of 2.3 million barrels. 

Total U.S. crude oil inventories stood at 383.9 million barrels, the highest level since June.

The report also showed that total motor gasoline inventories declined by 1.7 million barrels, compared to expectations for a drop of 140,000 barrels.

Concerns that demand may be improving but failing to make a serious dent in supplies pushed prices lower despite advancing economic indicators.

In the U.S., the Institute of Supply Management's Manufacturing Purchasing Managers Index  rose to 56.4 in October from 56.2 in September, defying expectations for a decline to 55.0. 

The report came a day after data showed that manufacturing activity in the Chicago region expanded at the fastest rate in 30 years in October, while a separate report showed that U.S. initial jobless claims fell in line with expectations last week.

Meanwhile, a stronger dollar, the product of advancing U.S. economic indicators, softened oil prices as well.

A strong greenback makes oil less attractive on dollar-denominated exchanges.

Meanwhile on the ICE Futures Exchange, Brent oil futures for December delivery were down 2.04% at USD106.62 a barrel, up USD11.71 from its U.S. counterpart. - investing.com

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