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3/23/2016, 8:00 PM (Source: TeleTrader)
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Oil drops below $40 on oversupply, strong dollar

Prices of crude oil fell sharply on Wednesday in an apparent lagged response in the markets on the latest report of build-up of inventories in the United States, and close to the time when trade at the U.S. commodity market ends for the day.

The U.S. light sweet crude West Texas Intermediate for May delivery fell 4.30% to $39.73 a barrel at the Intercontinental Exchange by 7:50 p.m. CET (2:50 p.m. EST). The daily high was $42.19 a barrel.

The international benchmark Brent dropped 3.33% to $40.43 a barrel, after hitting daily high of $42.47 a barrel.

The Organization of the Petroleum Exporting Countries reported the OPEC daily basket price of 13 crudes at $36.68 a barrel on Tuesday, compared with $36.27 the previous day.

The U.S. Energy Information Administration (EIA) reported oil inventories rose by 9.4 million barrels in the week ending March 18, to 532.5 million barrels, hitting a record for this time of year, and for the sixth week in a row.

Meanwhile, the U.S. dollar kept strengthening throughout the day, an indicator of the possible market trends, as it makes commodities - traded for, or denominated in dollars - less attractive for buyers which hold other currencies such as the euro.

The greenback rose 1.25% against its Canadian counterpart, which is strongly dependent on oil prices and export outlook. The dollar was 0.31% stronger compared to the euro, 0.26% against the Swiss franc, and up 0.65% versus the U.K. pound, while adding just 0.02% to already strong Japanese yen, all at 8:00 p.m. CET (3:00 p.m. EST). The dollar index was 0.38% stronger.

Breaking the News / ZR