Salem Radio Network News Thursday, December 7, 2023


Oil prices fall 2% to 3-week low on strong US dollar, profit taking

By Scott DiSavino

NEW YORK (Reuters) -Oil prices fell about 2% on Monday to a three-week low as a higher-priced Brent contract expired, the U.S. dollar strengthened and traders took profits, concerned about forecasts of rising crude supplies and pressure on demand from high interest rates.

On its first day as the front-month, Brent futures for December delivery fell to $90.84 a barrel by 1:26 p.m. EDT (1726 GMT), down $1.36, or 1.5%, from where it settled on Friday.

That was down about 5% from where the November future closed on Friday when it was still the front-month. That was the Brent front-month’s biggest daily percentage decline since late May.

U.S. West Texas Intermediate (WTI) crude fell $1.57, or 1.7%, to $89.22 per barrel.

Both benchmarks were headed for their third daily decline and their lowest settlements since mid-September.

Energy analysts said some traders took profits after crude prices in the third quarter rose nearly 30% to 10-month highs.

Before the last few days of crude price declines, U.S. speculators boosted their net long futures and options positions on the New York Mercantile and Intercontinental Exchanges to the highest since May 2022, according to the U.S. Commodity Futures Trading Commission.

On Monday, the U.S. dollar <.DXY> rose to a 10-month high against a basket of other currencies after the U.S. government avoided a partial shutdown. Economic data still fuels expectations the U.S. Federal Reserve will keep rates higher longer, which could slow economic growth. This could dent oil demand, along with a stronger dollar which makes oil more expensive for holders of other currencies.

“The global outlook is quickly taking a turn for the worse and that is both driving the king dollar trade again and weighing on the crude demand outlook,” said Edward Moya, senior market analyst at data and analytics firm OANDA, noting that soaring bond yields were pressuring crude prices.

In Europe, manufacturing data showed the euro zone, Germany and Britain remained mired in a downturn in September.

In China, the world’s biggest oil importer, the World Bank maintained its forecast for 2023 economic growth at 5.1%, but trimmed its prediction for 2024, citing persistent weakness of its property sector.


Pumping more crude supply into the system, Turkey’s energy minister said the country will restart operations this week on a pipeline from Iraq that has been suspended for about six months.

Additionally, Saudi Arabia could start to ease its additional voluntary supply cut of 1 million barrels per day (bpd), ING analysts said in a note.

OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) with Russia and other allies, meets on Wednesday but is unlikely to tweak its current oil output policy.

A Reuters survey showed OPEC oil output rose for a second straight month in September despite cuts by Saudi Arabia.

But in a move that could reduce oil supplies in the future, Spain’s energy minister and the head of the International Energy Agency (IEA) backed the Netherlands’ call for an international coalition to phase out fossil subsidies.

(Reporting by Scott DiSavino in New York, Paul Carsten in London, Yuka Obayashi in Tokyo and Emily Chow; Editing by Kim Coghill, Kirsten Donovan, Sharon Singleton and David Gregorio)


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