On Tuesday, oil prices plunged as difference broadening within the producer cartel OPEC on who should reduce how much output in a planned coordinated reduction to prop up prices.
The greenback, which held close to nine month peaks against a basket of major currencies, also influenced on prices. A strong dollar makes greenback-denominated commodities, including oil more costly for holders of other currencies.
International Brent crude oil futures drop 8 cents to $51.38 per barrel as of 0528 GMT from their previous close.
U.S. West Texas Intermediate (WTI) crude futures declined 1 cent at $50.51 a barrel.
On Sunday, Iraq’s oil minister Jabar Ali al-Luaibi stated the 2nd largest producer in the Organization of the Petroleum Exporting Countries (OPEC) wanted to be excused from production curbs as it required additional money to fight Islamic State militants.
“Crude oil prices labored under the weight of various OPEC members seeking exemption from the production cut agreement,” ANZ bank said on Tuesday.
Until there is more transparency on the planned reduction, which OPEC expect will be coordinated with non-members like Russia, analysts said “oil prices would likely remain range-bound – but volatile – around current levels.”
“Expect more of this choppy interplay until more concrete news emerges, as speculative buying runs into record producer selling of the futures contracts for hedging,” said Jeffrey Halley, senior market analyst at brokerage OANDA in Singapore.
The private American Petroleum Institute (API) is scheduled to post its weekly crude stocks estimates later on Tuesday, followed by the official Energy Information Administration (EIA) data scheduled on Wednesday.
A Reuters poll presented that U.S. crude inventories were estimated to have increased last week by an expected 800,000 barrels to 469.5 million barrels.
That approached after a decline of over 5 million barrels in the week to Oct. 14. U.S. crude inventory data are closely observed to measure supply and demand in the world’s largest crude consumer.
On Additional News
On Tuesday, gold prices plunged in Asia with the double combination of a stronger greenback and increasing expectations of a Fed rate hike by the end of the year keeping sentiment downbeat.
Delivery of gold for December on the Comex division of the New York Mercantile Exchange drop 0.07 percent to $1,262.85 a troy ounce. Also on the Comex, silver futures for December delivery eased 0.18% to $17.572 a troy ounce. Delivery of Copper futures for December were cited flat at $2.095 a pound.
Suddenly, gold prices faced selling as expectations increase for a Fed rate hike by the end of the year. Investors have currently priced 73.6% possibility of a rate hike at the Fed’s December meeting, according to the reports.
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