Oil Continues to be Pressured by Oversupply as Saudi Output Intact

Oil prices fell to fresh 5-1/2 year lows on Tuesday, extending losses after a 5 percent plunge in the previous session as worries over a global supply glut intensified.

Brent crude fell close to $51 a barrel, its lowest since 2009, with cuts to Saudi Arabia’s official selling prices to Europe this week adding more pressure to the 55 percent price rout since June.

Saudi Arabia’s King Abdullah said in a speech read for him on Tuesday the country would deal with the challenge posed by lower oil prices “with a firm will” but gave no sign the world’s top exporter was considering changing its policy of maintaining production in the face of fast-growing U.S. shale supplies.

“We would need an indication that Saudi Arabia is considering output cuts,” said Carsten Fritsch, a commodities analyst with Commerzbank.

The Saudi official price cuts on Monday added to bearish data over the weekend showing that Russia’s 2014 oil output hit a post-Soviet-era high and December exports from Iraq, OPEC’s second-largest producer, reached their highest since 1980.

Brent crude LCOc1 fell as low as $51.23 a barrel on Tuesday, its lowest level since May 2009. It recovered slightly to $51.95 at 1310 GMT (0810 ET), down $1.16 on the day.

U.S. crude CLc1 was at $48.94, down $1.10, after falling to $48.47, its lowest since April 2009.

via Reuters

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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