Oil prices slide as US dollar weakens and Euro, Sterling gain
ALBAWABA – Oil prices dropped on Monday ahead of the meeting of the Organization of Petroleum Exporting Countries and its allies (OPEC+) Thursday, following statements last week that the group will likely enact oil cuts to bolster crude prices.
Brent crude futures fell $0.39, or 0.5 percent, to $80.19 a barrel by 0728 GMT, according to Reuters, while West Texas Intermediate crude futures were at $75.10 a barrel, down $0.44, or 0.6 percent.
Both contracts rose slightly last week, underpinned by expectations that Saudi Arabia and Russia could carry voluntary supply cuts into 2024, as OPEC+ is poised to introduce further cuts.
Meanwhile, the United States (US) dollar fell against other major currencies.
The pound rose to $1.2620, Reuters reported, while the US dollar fell 0.32 percent elsewhere, against the Japanese yen and Euro, with the latter up 0.2 percent to $1.0952.
Overall, Reuters reported the dollar index slipping 0.12 percent earlier on Monday, to 103.31, while the Bloomberg dollar index spot shows the greenback down 0.09 percent, at 103.3090. The dollar is headed for a monthly loss of more than 3 percent, marking its worst performance in a year.
Oil prices fall when supply outweighs demand - Shutterstock
In the meantime, indicators are pointing to oil supply seemingly outweighing demand, according to Bloomberg, weighing down on oil prices
Oil prices slide amid flooded market, weaker US dollar
Futures are well down from September highs, as widely watched timespreads for global benchmark Brent and US counterpart WTI have softened, signaling ample supply, and US stockpiles have jumped.
The gap between WTI’s two nearest contracts has dipped into a bearish contango, with near-dated prices at a $0.28 discount per barrel, compared to later-dated ones, Bloomberg reported. Whereas a month ago, the situation was the other way around — in backwardation, with a premium above $0.80.
Brent’s prompt spread also fell into contango earlier this month for the first time since June, although it’s since parred some of the losses.
Longer-term spreads have also fallen, with Brent’s six-month gap down to $1.05 a barrel in backwardation, from nearly $4 a month ago. Additionally, sour crude grades in the Mediterranean, including Basrah Medium, are trading at ever-widening discounts, while Asia’s appetite for oil is also softening.
