2-9-18 7:08 AM EST | Email Article
By Neanda Salvaterra 

Oil prices fell further Friday as investors continue to worry about a surge in U.S. production and the selloff in equity markets.

Brent crude, the global oil benchmark, fell 0.8% to $64.31 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.1% at $60.48 a barrel. Brent has retreated nearly 6 % this week.

Crude has edged down because of "the profit taking from investors who propped up prices to over $70 dollar Brent over the last month," said Eugen Weinberg, head of commodities research at Commerzbank. "The timing probably has something to do with over speculation and an overheated market, but fundamentally things are going to head down from here."

Until recently, oil prices have been buoyed by production cuts from the Organization of the Petroleum Exporting Countries and other large producers among other threats to supply.

Now the market fundamentals are changing as recent increases in prices brings more oil out of U.S., some analysts say.

Last year investors where lulled into complacency that "this time it is different" and American producers won't ramp up output, said Olivier Jakob, managing director of Petromatrix. But that narrative proved to be false.

"U.S. producers have reacted in style to the rising oil prices and have accelerated the pace of growth of U.S. crude oil production," said Mr. Jakob.

U.S. oil inventories are creeping up after having fallen at the end of last year and output has edged above 10 million barrels a day.

The downturn in the oil market is also coming amid a selloff in the equity markets, as investors there fret about the potential for higher inflation and central bank action. Stocks in Europe and Asia were on pace on Friday for their worst week in two years after a late slump Thursday pushed the Dow Jones Industrial Average and S&P 500 into correction territory.

While that has not pushed investors to dump so-called riskier assets wholesale, oil has suffered as more speculative investors sell out of bets that crude prices will continue to edge up.

Analysts will see just how far this has happened later Friday, with the publication of net speculative positions from the London's ICE Futures exchange and other major exchanges.

Also later Friday, Baker Hughes Inc. is set to release its weekly data on the number of rigs drilling for oil in the U.S., a bellwether for activity in the sector.

Nymex reformulated gasoline blendstock -- the benchmark gasoline contract -- fell 0.1% to $1.76 a gallon. ICE gasoil changed hands at $569.75 a metric ton, down $1.50 from the previous settlement.


(END) Dow Jones Newswires

February 09, 2018 07:08 ET (12:08 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
Add a Comment

Try Premium Membership today. Your first 14 days are free of charge. Start my Premium Membership Trial.
Sponsored Links
Buy a Link Now
Sponsor Center
Content Partners