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Tuesday, 6 February 2018 00:00 - - {{hitsCtrl.values.hits}}
Tokyo (Reuters): Oil prices yesterday extended declines from the end of last week amid a wider
market selloff and a stronger dollar, with Brent crude falling to its lowest in nearly a month.
Other markets dropped as investors were spooked by 2 February’s payrolls report from the United States, which showed wages growing at their fastest pace in more than 8-1/2 years, fuelling inflation expectations.
Brent was down 68 cents, or 1%, at $67.91 a barrel at 0344 GMT, after falling 1.5% on 2 February. Brent’s weekly drop was 2.75% last week.
US West Texas Intermediate (WTI) crude declined 72 cents to $ 64.73 a barrel, after dropping 0.5% in the previous session. WTI fell by 1% during the last week.
“Oil is caught up in this general risk-off move, not helped at the margins by a little bit of strength in the US dollar,” said CMC Markets Chief Market Analyst Ric Spooner, in Sydney.
Asian shares were down the most in more than a year yesterday as fears of resurgent inflation battered bonds.
Wall Street dropped last week from record highs as inflation concerns sparked speculation that central banks globally might be forced to tighten policy more aggressively.
The three major US indexes capped their worst weekly losses in two years, after closing at record highs the previous week.
“The size of the move in US equities doesn’t always mean this, but usually after a move like that and particularly when it follows such a long uptrend, there is follow through selling,” Spooner said.
Rising US oil production has also helped push down oil prices, undermining attempts by the Organisation of the Petroleum Exporting Countries to support prices.
Data from the US government last week showed that output climbed above 10 million barrels per day in November 2017 for the first time since 1970, as shale drillers expanded operations after gains in oil prices last year.
“Over the course of the next few weeks one of the key things is going to be US production data and whether the increase in shale rigs recently is going to increase,” Spooner said.
US energy companies did add oil rigs for a second week in a row last week, energy services company Baker Hughes Inc reported on 2 February. Drillers added six oil rigs in the week to 2 February, bringing the total to 765.
Hedge funds and money manager reduced last week their bullish positions on US crude, cutting their net-long positions from a record after three weeks of increases.
The speculator group cut its combined WTI futures and options positions on New York and London exchanges by 18,365 contracts to 531,235 in the week to 30 January, the Commodity Futures Trading Commission reported on 2 February.
