OPEC forecast, strong dollar drive oil prices down in Asia

OPEC forecast, strong dollar drive oil prices down in Asia

Friday, November 7, 2014 7:07 am

OPEC: 2015 forecast dampens oil market

OPEC: 2015 forecast dampens oil market

Oil prices fell in Asia Friday after the OPEC oil cartel slashed its longer-term global demand outlook, while a stronger dollar also weighed, analysts said.

The benchmark US futures contract, West Texas Intermediate for December delivery, dropped 36 cents to $77.55 while Brent crude for December eased 52 cents to $82.34 in afternoon trade.

The Organisation of the Petroleum Exporting Countries estimated in its annual world outlook Thursday that demand for its crude will fall from just above 30 million barrels per day in 2013 to 28.2 million in 2017, before starting to rise again.

The 12-nation group said the United States and Canada are the primary drivers of non-OPEC output growth, in part due to shale-oil production.

Singapore’s United Overseas Bank said “US and global crude prices resumed its decline” after the release of the report, adding to heavy losses earlier this week owing to price cuts by Saudi Arabia.

Prices were also under pressure from the stronger US dollar.

The US dollar bought 115.31 yen in late-morning Asian trade, from 115.16 yen in New York Thursday afternoon. The greenback has surged against the yen since last Friday, when the Bank of Japan ramped up its stimulus programme.

A stronger greenback makes dollar-priced commodities like oil more expensive for buyers using weaker currencies, which in turn tends to hit demand and prices.

Investors are also keeping an eye on the release of October non-farm payrolls data Friday that is expected to paint an optimistic picture of the US economy.

Initial jobless claims fell 10,000 to to 278,000 in the week ending November 1, the lowest level in 14 years, the US Labor Department said Thursday.

“The very positive weekly jobless claims data reinforced expectations for a potentially strong US October jobs report today which could bring forward rate hike expectations,” UOB said.

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