BackBrent crude oil falls to $85 on strong dollar, oversupply
Brent for Dec was down $1.20 at $85.03 a barrel
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London: Brent crude oil fell by more than a dollar to around $85 a barrel on Friday as a firmer dollar and a well supplied oil market pushed the benchmark towards its steepest monthly decline since 2012.
The dollar rose to its highest level since June 2010 on Thursday after data showed the US economy grew 3.5% in the third quarter, topping estimates for a 3% rise.
“It has not been a good month for commodity indices," Olivier Jakob of Petromatrix told the Reuters Global Oil Forum, noting that gold as well as oil was under pressure from the dollar surge.
A strong dollar makes commodities such as oil more expensive for buyers using other currencies, suppressing demand.
Brent for December was down $1.20 at $85.03 a barrel by 1440 GMT. The oil benchmark has fallen more than 10% so far in October, its biggest monthly drop since May 2012.
US crude was down 90 cents at $80.22 per barrel, having lost 12% this month, also its worst performance since May 2012.
The Bank of Japan surprised financial markets on Friday by expanding its stimulus spending, boosting Japanese equities but raising concerns about the economic health of the oil importer.
The decision also put pressure on the yen, contributing to the strength of the dollar which rose to a near seven-year peak of ¥112.15.
China’s manufacturing sector is stable but faces relatively big downward pressure on growth, the ministry of industry and information technology said on Friday.
In contrast to slowing demand, global supply has increased, and the Organization of the Petroleum Exporting Countries (Opec) has given no indication that it will cut output targets at a meeting on 27 November.
Hans van Cleef, senior energy economist at ABN AMRO in Amsterdam, told the Reuters Global Oil Forum that there would be “tough discussions" at the Opec meeting but that the output quota was likely to remain unchanged at 30 million barrels a day.
Opec secretary general Abdullah al-Badri said on Wednesday the cartel’s output was unlikely to change in 2015 and that he was not concerned about falling prices.
“Opec will be happy to see prices languish in a lower range in order to regain market share against US producers, whose costs are higher," said Tony Machacek, a broker at Jefferies in London. Reuters
Manolo Serapio Jr. and Florence Tan in Singapore also contributed to this story.
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