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Crude falls on supply concerns, U.S. dollar's advance

CommoditiesSep 19, 2014 12:45PM ET
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Oil falls on fears of a supply glut, while stronger dollar weighs as well - A stronger U.S. dollar coupled with concerns the world is awash in crude sent oil futures falling on Friday.

A firmer greenback makes oil less attractive on dollar-denominated exchanges, especially in the eyes of investors holding other currencies.

In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in November traded down 0.43% at $91.58 a barrel during U.S. trading. New York-traded oil futures hit a session low of $91.16 a barrel and a high of $92.24 a barrel.

The November contract settled down 1.31% at $91.98 a barrel on Thursday.

Nymex oil futures were likely to find support at $89.76 a barrel, Monday's low, and resistance at $94.12 a barrel, Tuesday's high.

Concerns that global oil supply is outstripping demand sent crude futures falling on Friday.

While the U.S. economy is gaining steam and will likely consume more fuel and energy going forward, Europe and China are still battling headwinds, which has taken its toll on energy markets.

A stronger dollar also fueled the selloff.

The Federal Reserve on Wednesday said that it will likely close its monthly bond-buying program in October and suggested it will raise interest rates in 2015.

While some time will pass when the bond-buying program closes and rates begin to rise, investors concluded that borrowing costs are set to climb in 2015 regardless, which should open the door to a gradual strengthening trend for the dollar.

Wednesday's bearish U.S. storage data also kept prices in negative territory.

The U.S. Energy Information Administration said in its weekly report on Wednesday that U.S. crude oil inventories increased by 3.7 million barrels in the week ended Sept. 12, confounding expectations for a decline of 1.7 million barrels, which stoked fears of a supply glut.

Total U.S. crude oil inventories stood at 362.3 million barrels as of last week.

The report also showed that total motor gasoline inventories decreased by 1.6 million barrels, compared to forecasts for a decline of 0.3 million barrels, while distillate stockpiles rose by 0.3 million barrels.

Separately, on the ICE Futures Exchange in London, Brent oil futures for November delivery were up 0.50% at US$98.19 a barrel, while the spread between Brent and U.S. crude contracts stood at US$6.61 a barrel.

Crude falls on supply concerns, U.S. dollar's advance

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