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MTECHTIPS:-Oil drops toward $59 on dollar, stock builds
Brent crude oil fell toward $59 a barrel on Monday as the dollar strengthened and a supply glut pushed global oil inventories to record highs. The dollar hit a more than 11-year high against a basket of currencies after data showed the U.S. unemployment rate in February fell to its lowest level since May 2008, making commodities priced in the greenback more expensive for holders of other currencies. Oil inventories are rising across the world as production outstrips demand, offsetting geopolitical tensions in the Middle East and the risk of output cuts in Libya and Iraq. Brent was down 30 cents at $59.43 a barrel by 4 a.m. ET. The North Sea crude oil futures contract fell 4.6 percent last week in its biggest decline since the week ended Jan. 9. U.S. crude was up 15 cents a barrel at $49.76. It closed down $1.15 on Friday, ending a third week of declines. ”More and more investors are coming to the conclusion that the market is awash with oil,” said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt. “Unprecedented stocks levels cannot be ignored forever.” Goldman Sachs (N:GS) analysts argued in a note to clients that oil prices would reverse recent gains due to rising global inventories. They forecast U.S. crude would drop to around $40 a barrel. Oil producers in the Organization of the Petroleum Exporting Countries (OPEC) have opted not to curb output, despite oversupply in many parts of the world, choosing to defend market share rather than try to support oil prices
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