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28 November 2023

Oil drops below $100

By Agencies

Oil fell below $100 a barrel on Thursday for the first time in two weeks, extending a hefty sell-off in the previous session on growing concerns an economic slowdown in top consumer the United States would undermine global energy demand.


US crude was down $3.00 to $99.54 barrel by 1.02pm GMT, and the first time since March 5 that it has fallen below $100, adding to an almost $5 loss on Wednesday.


London Brent crude fell $2.42 to $98.31 by 1.05pm GMT.


"We continue to see profit-taking among commodities. There are also macro-economic concerns about the economy and the dollar has been doing better," said Mike Wittner, global head of oil market research in London for Société Générale.


Gold dropped more than 4 per cent to a one-month low Thursday, while platinum slid more than 5 per cent to $1,820 an ounce, the lowest since early February as funds cashed in..


Oil and other commodities had struck a series of record highs since the beginning of the year as investors fled stocks markets and took refuge in dollar-denominated assets.


US oil prices averaged around $97 a barrel since the beginning of this year, up from $72.30 in 2007.


But investors nervous about the economy are cashing in on recent record prices in commodities and energy.


"Commodity players seem to be coming round to the notion that the deterioration in the US macro picture cannot be ignored," Edward Meir said in a daily note by MF Global.


 Weekly US stocks data released on Wednesday showed lower fuel stocks than forecast, but the figures also revealed a fall in demand.


US demand for gasoline over the past four weeks was 0.1 per cent below last year, the US Energy Information Administration figures showed.


Adding to the gloom, US government data showed on Thursday that the number of jobless staying on aid rolls rose to the highest in three and a half years to 378,000, higher than the expected 360,000, possibly partly due to an auto industry strike.


 "We believe that the combination of low economic growth in the United States and high oil price inflation will have its strongest impact on demand in the first half of the year," Goldman Sachs said in a note.


Goldman pointed to the 3.2 per cent fall in US oil demand over the past 4 weeks from last year according to stocks data released on Wednesday. (Reuters)