Oil drops below $65 first time in six days
Crude oil price at the international market dropped below $65 a barrel Thursday, making it the first time the price would decline in the last six days, following the US Federal Reserve interest rate cut and rising US crude oil output that has helped keep the market well supplied.
OPEC and partners including Russia, in an alliance known as OPEC+, have been curbing output this year to support the market.
The Federal Reserve reduced rates on Wednesday, but against expectations the head of the US central bank
said might not be the start of a lengthy series of cuts to shore up the economy against global economic weakness.
Brent crude LCOC1, the international benchmark, fell 85 cents to $64.20 a barrel by 08.56 GMT, having dropped more than $1 earlier in the session. US West Texas Intermediate (WTI) CLC1 crude was down 89 cents at $57.69.
Oil stockpiles fell again last week, along with gasoline and distillate inventories, data from the American Petroleum Institute industry group showed recently
Crude inventories fell by six million barrels to 443 million barrels in the week ended July 26, against a forecast for a drop of 2.6 million barrels in a Reuters’ poll of analysts.
“The outlook for another draw in US crude inventories and renewed outages in Libya is supporting oil prices,’’ said UBS oil analyst, Giovanni Staunovo.
Libya’s Sharara oilfield, the country’s largest, was shut down on Tuesday after a problem with a valve on the pipeline linking it to the Zawiya oil terminal.
Tensions in the Middle East remain high, providing another bullish catalyst for prices, with the US formally asking Germany to join France and Britain to help to secure the Strait of Hormuz after the seizure of a British tanker by Iran.
“A relatively upbeat mood in risky assets took a spectacular u-turn after last night’s Fed decision,’’ Tamas Varga of oil broker PVM said.
“The dollar started to strengthen and equities and oil went into a kind of meltdown mode.’’
A rising dollar makes oil more expensive for holders of other currencies and tends to weigh on commodities priced in the US currency. The dollar hit a two-year peak against the euro on Thursday after the Fed decision.