Oil prices slide as US reserves swell, factory orders disappoint

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New Delhi | Updated: February 4, 2019 11:23:14 PM

The Organization of Petroleum Exporting Countries’ output fell the most in two years in January, according to a Bloomberg survey of officials, analysts and ship-tracking data. Meanwhile, Venezuelan oil exports fell to 1.11 million barrels a day in January, down 11 percent in a month, after the U.S. announced sanctions on the country’s state oil company.

Oil fell the most in a week amid reports of swelling crude stockpiles and disappointing economic activity in the U.S.

Futures declined as much as 3.6 percent on Monday in New York after earlier touching a two-month high. Supplies at a key crude storage hub in Cushing, Oklahoma, jumped by almost 1 million barrels last week, data provider Genscape Inc. was said to report. Meanwhile, the U.S. government said factory orders unexpectedly fell in November, a worrying sign for demand.

The news, coupled with a jump in the value of the dollar, undermined the appeal of commodities priced in the greenback.

“The strength in the dollar appears to be weighing on the broader commodities complex,” said ING Bank NV’s head of commodities strategy, Warren Patterson. “However the underlying story for oil remains constructive as a result of production cuts.”

Oil has rebounded this year as OPEC’s output cuts have taken effect. The rally has seen hedge funds slash bearish bets on crude, though gains have been capped by slowing global growth and uncertainty over the U.S.-China trade war. Venezuela’s political crisis has also kept traders on edge amid possible further disruption to supplies.

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West Texas Intermediate crude for March delivery dropped $1.37 to $53.89 at 10:30 a.m. on the New York Mercantile Exchange. The contract had increased to $55.75 earlier, the highest since Nov. 21.

Brent for April settlement fell 91 cents to $61.84 on the London-based ICE Futures Europe exchange. The global benchmark crude was at a $7.95 premium to WTI for the same month.

The Organization of Petroleum Exporting Countries’ output fell the most in two years in January, according to a Bloomberg survey of officials, analysts and ship-tracking data. Meanwhile, Venezuelan oil exports fell to 1.11 million barrels a day in January, down 11 percent in a month, after the U.S. announced sanctions on the country’s state oil company.

In America, rigs drilling for oil fell by 15 to 847 last week, the lowest since May, Baker Hughes data showed.

Other oil-market news: Gasoline fell 1.5 percent to $1.4149 a gallon. President Trump said his administration is “doing very well” on making a trade deal with China ahead of a March 1 deadline when tariffs are set to rise. As Russia’s Big Oil is set to report earnings for the final quarter of 2018, it’ll have to say goodbye to a streak of earlier record rises.

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