Oil Prices Erase Losses
November 16 2015 - 2:03PM
Dow Jones News
By Nicole Friedman And Georgi Kantchev
NEW YORK--U.S. oil prices rose Monday, erasing earlier losses,
after nearing the psychologically key $40-a-barrel level.
The U.S. benchmark fell as low as $40.06 a barrel on the New
York Mercantile Exchange in intraday trading before rebounding.
Prices recently rose 56 cents, or 1.4%, to $41.30 a barrel.
Analysts attributed the reversal to technical trading after
prices approached $40 a barrel, a level last reached in August amid
broad concerns about the pace of Chinese economic growth. Market
participants hold more than 20,000 December put-option contracts at
$40, according to CME Group Inc., which give traders the right to
sell a Nymex futures contract if the price falls to that level. The
December options contract expires Tuesday, and traders could be
closing out those positions ahead of expiration.
Brent, the global benchmark, recently traded down 35 cents, or
0.8%, to $44.12 a barrel on ICE Futures Europe.
Prices wavered Monday as traders weighed the persistent global
glut of crude against concerns about violence in the Middle
East.
France escalated its air campaign against Islamic State
following the Paris terror attacks, increasing market jitters about
the Middle East, the world's most prolific oil-producing
region.
However, ample production of crude oil around the world and a
huge overhang of supplies limited price gains. The International
Energy Agency said Friday that commercial stockpiles of crude held
by developed nations reached near three billion barrels at the end
of September, a record high and enough to meet global demand for
about 64 days.
Governments of developed nations including the U.S. hold an
additional 34 days' worth of supply, the IEA said. Stockpiles of
gasoline and other refined products also are high.
Data provider Genscape Inc. said Monday that crude-oil supplies
in the key storage hub of Cushing, Okla., rose by more than a
million barrels in the week ended Friday, according to a broker who
had viewed the data.
Both benchmarks slid to three-month lows Friday on concerns
about large global inventories.
"It would seem that the oil markets are more concerned with the
fundamentals of oil rather than the short-term impacts of
heightened political tensions," said Daniel Ang, an analyst with
Phillip Futures.
On Friday, Baker Hughes Inc. reported that the U.S. oil-rig
count rose by two to 574, the first increase in 11 weeks. The
number of rigs drilling for oil, which is viewed as a proxy for
activity in the oil industry, has fallen sharply since oil prices
started falling last year.
Despite that fall, the U.S. continues to pump more crude than
last year, at around 9.2 million barrels a day. Other big oil
suppliers, like Saudi Arabia and Russia, have ramped up their crude
output in a bid to secure market share.
The average price of crude sold by members of the Organization
of the Petroleum Exporting Countries fell to $39.21 a barrel on
Friday, below $40 a barrel for the first time since 2009, the
organization said Monday.
Gasoline futures recently fell 0.7% to $1.23 a gallon. Diesel
futures fell 0.2% to $1.3785 a gallon.
Summer Said contributed to this article.
Write to Nicole Friedman at nicole.friedman@wsj.com and Georgi
Kantchev at georgi.kantchev@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 16, 2015 13:48 ET (18:48 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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