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Wednesday, October 16th, 2019

Oil down 2 pct, strong dlr knocks U.S. crude off 15-month highs

by October 20, 2016 General

By Ethan Lou

NEW YORK (Reuters) – Oil prices fell about 2 percent on Thursday, as a resurgent dollar encouraged players to take profit on the previous day’s rally that had sent U.S. crude to 15-month highs.

The dollar hit seven-month highs against basket of currencies and a three-month peak versus the euro after the European Central Bank kept interest rates unchanged. The greenback was also lifted by U.S. housing data that showed home resales surged in September.

Benchmark Brent crude for December delivery was down $1.23, or 2.3 percent, at $51.44 per barrel by 1:17 p.m. EDT (1717 GMT).

U.S. West Texas Intermediate (WTI) crude’s November contract, which expires at Thursday’s settlement, was off by $1.10 cents, or 2.1 percent, at $50.50. WTI’s more-active December contract slid $1.05 to $50.77.

On Wednesday, WTI November hit a 15-month high of $51.93 after a large and unexpected drawdown in U.S. crude stocks. [EIA/S]

Further weighing on prices was skepticism over the Organization of the Petroleum Exporting Countries’ (OPEC) upcoming plan to limit production, said Tariq Zahir, trader at Tyche Capital Advisors in New York.

“The comments overnight, of (OPEC) talking with Russia about whether they can increase their production levels, is putting into doubt whether there is going to be an agreement,” he said.

The chief executive of Russia’s Rosneft has said the state oil producer has potential to add as much as 200 million tonnes a year, or about 4 million barrels per day, to its output.

Despite Thursday’s drop, oil prices are still up about 13 percent since OPEC announced on Sept. 27 its first planned output cut in 8 years to rein in a global glut that halved prices from mid-2014 highs above $100 a barrel.

The chief executive of French oil major Total, Patrick Pouyanne, told an oil conference in Paris on Thursday he was optimistic that OPEC will agree on output cuts among its members and other oil producers at its Nov. 30 policy meeting. But Thierry Pilenko, who heads French oil services company Technip told the same event the oil market crisis was far from over and the next two years might be more difficult for some.

(Additional reporting by Sabina Zawadzki in LONDON and Henning Gloystein in SINGAPORE; Editing by William Hardy, Alistair Bell and David Gregorio)