Brent crude is now trading just over $92 a barrel, close to a two and a half year low, and compared with $115 a barrel in June and WTI US crude is around $90 a barrel, the lowest since April 2013. Oil and gas shares have fallen as crude falls back with the small cap sector particularly hard hit.
BG Group
With the strength of the US dollar and subdued global demand hitting oil prices , news that Saudi Arabia had lowered its official selling prices for its customers across all regions in November in a bid to increase its share of the market, caused the price per barrel to drop even further. Stockpiles of oil in the United States were also on the up with the US Energy Information Administration saying that stockpiles at Cushing, Oklahoma increased by 315,000 barrels to 20.5 million last week. The drop in Brent has also been partly due to the return of high-grade Libyan oil which is preferred by European refiners after supplies were severely reduced earlier this year.
With strong employment data from the United States yesterday and with it the expectation that the Federal Reserve will raise interest rates early in 2015, the US dollar continues to strengthen. With this strength, a fight back in oil prices seems unlikely in the short term unless OPEC can get its act together and dramatically cut supply to drive prices back near $100 a barrel. But with Saudi Arabia seemingly willing to suffer lower prices to gain share the discussions at OPEC could be difficult.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.
by contrarianuk
Energy stocks get a hard time as oil falls
Oct 2, 2014 at 2:52 pm in Market Commentary by contrarianuk
Brent crude is now trading just over $92 a barrel, close to a two and a half year low, and compared with $115 a barrel in June and WTI US crude is around $90 a barrel, the lowest since April 2013. Oil and gas shares have fallen as crude falls back with the small cap sector particularly hard hit.
BG Group
With the strength of the US dollar and subdued global demand hitting oil prices , news that Saudi Arabia had lowered its official selling prices for its customers across all regions in November in a bid to increase its share of the market, caused the price per barrel to drop even further. Stockpiles of oil in the United States were also on the up with the US Energy Information Administration saying that stockpiles at Cushing, Oklahoma increased by 315,000 barrels to 20.5 million last week. The drop in Brent has also been partly due to the return of high-grade Libyan oil which is preferred by European refiners after supplies were severely reduced earlier this year.
With strong employment data from the United States yesterday and with it the expectation that the Federal Reserve will raise interest rates early in 2015, the US dollar continues to strengthen. With this strength, a fight back in oil prices seems unlikely in the short term unless OPEC can get its act together and dramatically cut supply to drive prices back near $100 a barrel. But with Saudi Arabia seemingly willing to suffer lower prices to gain share the discussions at OPEC could be difficult.
Contrarian Investor UK
IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.