Oil price drops on strong dol­lar

The Myanmar Times - - International Business -

OIL prices tum­bled again yes­ter­day on a pick-up in drilling and a strong dol­lar as spec­u­la­tion swirled that the Fed­eral Re­serve could hike in­ter­est rates as soon as this month.

The com­mod­ity plunged on Septem­ber 9, wip­ing out the pre­vi­ous day’s rally as an­a­lysts said a sharp fall in US in­ven­to­ries last week was likely a one-off caused by im­port cut­backs as Hur­ri­cane Her­mine ploughed through the Gulf of Mex­ico.

US West Texas In­ter­me­di­ate fell 81 cents to US$45.07 yes­ter­day, while Brent tum­bled 75 cents to $47.26.

Both con­tracts col­lapsed al­most 4 per­cent at clos­ing last week.

News that oil firms had opened up more rigs to drill fu­elled ex­pec­ta­tions US out­put would in­crease at a time when de­mand re­mains weak.

“The mar­ket is still in sur­plus and there are high in­ven­to­ries, so we could see oil de­cline fur­ther from here, per­haps back to the low $40s,” said Ric Spooner, a chief mar­ket an­a­lyst at CMC Mar­kets in Syd­ney.

“If OPEC can get their act to­gether and agree on a deal, it could trig­ger a bit of short cov­er­ing.”

Traders are await­ing a meet­ing this month of key pro­ducer Rus­sia and the OPEC ex­porters club to ad­dress a global sup­ply glut and over­pro­duc­tion cri­sis that has bat­tered prices for the past two years. –

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