Oil Continues Trading Lower As Glut Unchanged

Brent crude traded near its lowest level in four years amid speculation that a drop in OPEC output last month won’t eliminate a supply glut.

Futures declined for a third day. The Organization of Petroleum Exporting Countries said its production dropped by 226,400 barrels a day to 30.253 million in October, the largest decrease since March. West Texas Intermediate crude slid on forecasts that U.S. inventories rose for a sixth week.

“That factors that brought us down here are still the main focus,” said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut. “Even though OPEC said it cut production, we continue to have fears that we have a global supply glut. We can see another build in U.S. stockpiles this week.”

Brent for December settlement declined 58 cents, or 0.7 percent, to $81.09 a barrel at 9:07 a.m. New York time on the London-based ICE Futures Europe exchange. The contract, which expires tomorrow, closed at $81.67 yesterday, the lowest since October 2010. The more-active January contract was down 0.6 percent at $82.39 a barrel. The volume of all futures was 14 percent below the 100-day average.

WTI for December delivery dropped 72 cents, or 0.9 percent, to $77.22 a barrel on the New York Mercantile Exchange. Volume was 9.1 percent below the 100-day average. The U.S. benchmark crude was at a $3.86 discount to Brent on the ICE.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza