LONDON, Dec 14 (BSS/AFP) – Crude oil futures retreated this week on oversupply concerns as commodity traders focused largely
on the outlook for US stimulus.
OIL: Oil prices slid on Friday as dealers fretted over a global oversupply in crude, while speculation the US Federal Reserve will soon scale back its stimulus programme also weighed.
“Investors are not only concerned about an oversupply in the US from shale oil, but also from OPEC member countries like Iraq
which have pledged to increase supply even if prices fall significantly,” Kelly Teoh, market strategist at IG Markets in Singapore, told AFP.
The Organization of Petroleum Exporting Countries (OPEC)
earlier this month agreed to keep its production ceiling
unchanged at 30 million barrels a day.
However, pledges by its members Iraq and Iran to boost
output in 2014 have raised concerns about a potential glut, as US
shale oil output continues to increase.
The focus on oversupply has been exacerbated after a tribal
chief in Libya said a months-long blockade by armed protesters of
vital oil terminals would be lifted on December 15.
The protests as well as blockades of fuel deliveries by the
Berber minority have slashed Libya’s output to about 250,000
barrels per day, from normal levels of nearly 1.5 million bpd.
Prices were under pressure also as upbeat US economic data
pointed towards a sustained recovery in the world’s biggest
economy and raised speculation the Fed will soon scale back its
stimulus programme, Teoh said.
The oil market has been closely following the Fed’s debate
on when to wind down its $85-billion-a-month stimulus.
The onset of the Fed’s so-called tapering will boost the
greenback, making dollar-priced oil more expensive for countries
using other currencies, dampening demand.
By Friday on London’s Intercontinental Exchange, Brent North
Sea crude for delivery in January dropped to $108.28 a barrel
from $111.20 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate
or light sweet crude for January fell to $97.17 a barrel from
$97.43.