Oil Prices Follow Equities Lower as Dollar Climbs
December 14 2018 - 5:59AM
Dow Jones News
By Christopher Alessi
-- Oil prices weakened Friday, though the declines appeared to slow a week
after an OPEC-led decision by major producers to cut output starting next
year.
-- Brent crude, the global oil benchmark, was trading down 0.6% at $61.07 a
barrel on London's Intercontinental Exchange.
-- West Texas Intermediate futures, the U.S. oil standard, were down 0.6% at
$52.29 a barrel on the New York Mercantile Exchange.
HIGHLIGHTS
Dollar Pressure: A stronger U.S. dollar, combined with volatile
equity markets, have weighed down crude, said Giovanni Staunovo,
commodities analyst at UBS Wealth Management. Dollar-denominated
commodities like oil tend to have an inverse relationship with the
greenback, which was up 0.39% Friday morning, according to the WSJ
Dollar Index.
But Mr. Staunovo said that overall "I would think oil prices are
in a position of stabilizing around this level," aided by planned
production curbs from the Organization of the Petroleum Exporting
Countries and its allies outside the cartel, including Russia.
IEA Report: Bullish pressure on prices also came from the
International Energy Agency's latest monthly oil market report. The
agency on Thursday said that commercial oil stocks in the
Organization for Economic Cooperation and Development rose by 5.7
million barrels in October to stand at 2.872 billion barrels. That
marks the first time commercial petroleum inventories were above
the latest five-year average since March.
INSIGHT
OPEC+: Oil market participants continue to weigh whether a
decision by OPEC, de-facto led by Saudi Arabia, and production
allies led by Russia to cut crude output by a collective 1.2
million barrels a day next year will be enough to mop up a
burgeoning oil supply glut. Prices had initially risen on news of
the deal last Friday by as much as 5%, before paring some of those
gains at the start of this week.
"It will be chiefly up to OPEC, and Saudi Arabia above all, to
bring the oil price under control by complying strictly with the
agreed production cuts," analysts at Commerzbank wrote in a note
Friday. "Saudi Arabia therefore intends to reduce U.S. exports in
the short term," they added.
AHEAD
-- Baker Hughes releases weekly data on the number of rigs drilling for oil
in the U.S., a key barometer for activity in the sector.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
December 14, 2018 06:44 ET (11:44 GMT)
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