oil suffers biggest oneday fall since 2004
Oil suffers biggest one-day fall since 2004
Prices drop more than $7 to $114 on dollar rise, demand worries
Richard Valdmanis NEW YORK
CRUDE oil prices fell more than $7 on Friday in the biggest oneday
percentage slide since 2004 as dealers turned their focus to rising
supply levels and weakening global demand.
A rebound in the US dollar encouraged the sell-off, applying
downward pressure across the commodities markets by weakening the
purchasing power of buyers using other currencies, analysts said.
"People who were buying on Thursday are taking profits on Friday,"
said Peter Beutel, analyst at consultancy Cameron Hanover. "There is
also renewed technical selling and talk again of demand destruction.
The dollar is strong again too."
US light crude fell $6.07, or 5%, to $115.11 a barrel at 12:25 am
IST, — the biggest one-day fall in percentage terms since December
2004. London Brent crude fell $5.85 to $114.31 a barrel.
The slide completely reversed crude's surge on Thursday,
underscoring the increasing volatility of the energy market, which has
dropped more than 20% from peaks in mid-July but is still about 15% up
on the year. The declines on Friday were encouraged by two separate
reports Friday showing an uptick in Opec crude oil output and an
expected decline in US travel over the September 1 Labour Day holiday
weekend.
Industry consultant Petrologistics said on Friday Opec oil output
was expected to rise in August by 450,000 barrels per day to 32.9
million bpd, a factor that could further beef up inventory levels in
consumer nations.
Meanwhile, the US auto and travel group AAA said that Labour Day
holiday travel was expected to fall this year by the largest amount in
at least eight years as consumers struggle with higher gasoline prices
and airfares. Concerns high energy costs are taking a toll on global
fuel demand have played a big role in oil's sharp descent from peaks
above $147 a barrel in mid-July.
Friday's losses came after a big climb in prices earlier in the
week that had been supported by rising tension between the US and
Russia, the world's second biggest oil producer. — Reuters