Oil
declines amid stronger dollar, crude oversupply in U.S.
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[December 27, 2014]
By Jessica Resnick-Ault
NEW YORK (Reuters) - Oil prices fell
Friday, tumbling as the dollar strengthened and as a supply glut in top
consumer, the United States, trumped worries about falling production
from Libya.
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The market had come under pressure from Wednesday's Energy
Department report, which showed a 7.3 million-barrel rise in crude
inventories to their highest December level on record. Analysts had
expected a seasonal decline.
The slide was exacerbated as oil prices reacted to a strengthening
dollar index.
"There’s still significant weakness in confidence, and that means
that we’re going to have occasional retests to the downside,” said
Richard Hastings of Global Hunter Securities. The strengthening
dollar index triggered the slide on Friday, he said.
Additionally, the market continued to reel from bearish storage data
just before the Christmas holiday.
“The numbers on Wednesday were really bearish, and it’s possible the
market is still trying to digest them,” said Andrew Lebow, a Senior
Vice President of Jefferies in New York. “Maybe the path of least
resistance is down here, given that we’ve been in a long down
trend.”
Crude imports by Japan, the world's fourth-biggest oil buyer,
dropped 17.3 percent in November from a year earlier to 14.68
million kilolitres (3.08 million bpd), government data showed on
Thursday.
Brent crude settled down 79 cents at $59.45, while U.S. crude fell
$1.11 to $54.73 in thin trade as many countries were still on
holiday.
"We tried to rally off of the Libyan situation, but I think that the
market is still reeling from larger-than-expected inventory data,"
said Phil Flynn of Price Futures Group in Chicago.
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Fighting in Libya has cut output there to 352,000 barrels a day, or
about half November's average, state oil company spokesman said on
Thursday. This countered the U.S. Department of Energy's (DOE)
report showing a big stockbuild.
In Libya, a rocket hit a storage tank at the country's biggest
export terminal, Es Sider, setting it on fire as armed factions
allied to competing governments fought for control, officials from
both sides said on Thursday.
On Friday, officials said the blaze had spread to two more tanks.
(Additional reporting by Alex Lawler and Henning Gloystein; Editing
by Robin Pomeroy, Pravin Char, Chizu Nomiyama and Gunna Dickson)
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