Feb 07 2017

US Dollar Continues its Climb, Adverse Effect on Oil

The US dollar continued its climb in New York rising 0.3 percent, adversely affecting the price of oil as Futures fell 1.2 percent in trading on Monday.

On the New York Mercantile Exchange for March delivery, West Texas Intermediate fell 48 cents or 0.9 percent to $53.35 a barrel. Chief market strategist at Confluence Investment Management commented saying that with the high inventory level and the value of the dollar these prices are hard to justify. ICE Futures on the Europe exchange, Brent slipped 65 cents or 1.1 percent to $56.16 a barrel for April settlement. Crude global benchmark settled at a $2.16 premium to April WTI.

Since OPEC and non-OPEC members agreed to cut oil output production by 1.8 million barrels a day, US shale rigs have risen adding a total of 17 new drilling rigs to a total 583 ramping up, and taking advantage of the cuts.

Wrap-Up of Market News

According to sources, Iraq has dropped output of oil production by 187,000 barrels a day to 3.323 million barrels a day for January Data of the supply cuts for January is scheduled to be released by OPEC on February 13. Investors keep out a wary eye following President Donald Trump issuing a warning to Iran after they conducted a ballistic rocket test firing and imposed fresh sanctions, saying they are “playing with fire”. According to the head of Vitol Group Kho Hui Meng, Brent crude may fluctuate between $52 and $62 a barrel.

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