Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Market / Stock-market-news/  Oil drops to lowest since May 2009 after Russia, Iraq boost supplies
BackBack

Oil drops to lowest since May 2009 after Russia, Iraq boost supplies

Brent for February settlement fell 53 cents to $56.80 a barrel on the London-based ICE Futures Europe exchange in midmorning trade

Brent for February settlement fell as much as $1.85 to $55.48 a barrel on the London-based ICE Futures Europe exchange, also the lowest since May 2009. Photo: BloombergPremium
Brent for February settlement fell as much as $1.85 to $55.48 a barrel on the London-based ICE Futures Europe exchange, also the lowest since May 2009. Photo: Bloomberg

London/New York: Oil dropped to the lowest since May 2009 amid growing supply from Russia and Iraq and signs of manufacturing weakness in Europe and China.

Futures headed for a sixth weekly loss in New York and London. Oil output in Russia and Iraq surged to the highest level in decades in December, according to data from both countries’ governments. Euro-area factory output expanded less than initially estimated in December. A manufacturing gauge in China, the world’s second-largest oil consumer, fell to the weakest level in 18 months, government data showed yesterday.

Prices slumped 46% in New York in 2014, the steepest drop in six years and second-worst since trading began in 1983, as US producers and the Organization of Petroleum Exporting Countries ceded no ground in their battle for market share. Opec pumped above its quota for a seventh month in December even as US output expanded to the highest in more than three decades, according to data compiled by Bloomberg.

“We’re seeing more of the same," John Kilduff, a partner at Again Capital Llc, a New York-based hedge fund that focuses on energy, said by phone. “The Chinese and European PMI figures signal weaker demand, while there’s ever-increasing supply. Nobody is cutting back on output and now the Russians are posting post-Soviet production highs."

Brent for February settlement fell 53 cents, or 0.9%, to $56.80 a barrel on the London-based ICE Futures Europe exchange at 11.31am. It declined to $55.48, the lowest since 7 May 2009. Volume for all futures traded was 30% below the 100-day average. The European benchmark slumped 48% last year, the second-biggest annual loss on record behind a 51% tumble in the 2008 financial crisis. Brent traded at of $3.24 premium to WTI.

Factory output

West Texas Intermediate for February delivery rose 32 cents, or 0.6%, to $53.59 a barrel on the New York Mercantile Exchange after dropping to $52.03, the least since 1 May 2009. Volume for all futures traded was 34% below the 100-day average. Prices are down 3.2% this week.

A final reading of a Purchasing Managers’ Index for the euro area’s manufacturing industry stood at 50.6 in December, London-based Markit Economics said on Friday. The euro lost as much as 0.6% to 1.2026 per dollar. A stronger US currency usually reduces the appeal of commodities as a store of value.

In China, the official Purchasing Managers’ Index dropped to 50.1 in December from 50.3 the previous month, according to data from the statistics bureau and the China Federation of Logistics and Purchasing. A separate manufacturing reading from HSBC Holdings Plc and Markit Economics on 31 December also fell.

Factory index

Manufacturing in the US cooled in December, settling into a more sustainable pace of growth as the year drew to a close. The Institute for Supply Management’s factory index dropped to a six-month low of 55.5 from 58.7 in November, a report from the Tempe, Arizona-based group showed today.

The surge in oil supplies in Iraq and Russia signalled no respite in early 2015 from the glut that’s pushed crude prices lower. The two countries provided 15% of world oil supply in November, according to the International Energy Agency.

Russian oil output rose 0.3% in December to a post- Soviet record of 10.667 million barrels a day, according to preliminary data emailed today by CDU-TEK, part of the Energy Ministry. Iraq exported 2.94 million barrels a day in December, the most since the 1980s, oil ministry spokesman Asim Jihad said.

The final two burning crude-storage tanks were extinguished at Es Sider, Libya’s biggest oil port, National Oil Corp. spokesman Mohammed Elharari said by phone from Tripoli. The fires started 25 December, when Islamist militants shot rockets at the port in a second attempt to capture it.

Opec production

Opec’s production slid by 122,000 barrels a day from November to 30.24 million last month, led by losses in Saudi Arabia, Libya and the United Arab Emirates, a Bloomberg survey of companies, producers and analysts shows. The 12-member group has a collective target of 30 million a day.

US oil production averaged 9.12 million barrels a day in the week ended 26 December, according to the Energy Information Administration. Output increased to 9.14 million a day through 12 December, the most in weekly data that started in January 1983.

Inventories of gasoline surged in the week ended 26 December as production climbed to a record, EIA data showed.

Gasoline futures declined 3.14 cents, or 2.1%, to $1.4407 a gallon in New York. Diesel decreased 3.18 cents, or 1.7%, to $1.8018.

Regular gasoline at US pumps fell to the lowest level since May 2010. The average retail price slipped 0.9 cent to $2.231 a gallon on Thursday, according to Heathrow, Florida-based AAA, the nation’s biggest motoring group.

Enbridge pipeline

WTI erased earlier gains as Enbridge Inc., a pipeline operator that runs several lines across the US and Canada, restarted its North Dakota system after a fire at a truck- loading facility, according to a company spokesman.

The blaze began on Thursday at the location, which was leased to its unit Tidal Energy Marketing, Michael Barnes, a spokesman for Calgary-based Enbridge, said by phone. Eight out of 12 crude-storage tanks, with a capacity of 400 barrels each, caught fire at the site, according to Karolin Rockvoy, a manager at the Emergency Management Services for McKenzie County, North Dakota.

WTI may decline next week, a Bloomberg survey showed. Eighteen of 32 analysts and traders predicted futures may decrease through 9 January while eight respondents forecast prices will climb. Bloomberg

Heesu Lee in Seoul contributed to this story.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 02 Jan 2015, 10:37 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App