West Texas Intermediate and Brent crude extended declines from the lowest close in more than five years amid speculation that U.S. oil producers will fight OPEC for market share.
Futures dropped as much as 1.8 percent in New York and 1.9 percent in London. Crude explorers in the U.S. increased the number of operating rigs last week, defying predictions of a drilling slowdown, according to data from Baker Hughes Inc., a Houston-based field services company. Oil’s relative strength index remains below 30, signaling that the market is oversold. The Bloomberg Dollar Spot Index traded near the highest level since March 2009, damping the investment appeal of commodities.
Crude is trading in a bear market amid signs that U.S. output is expanding even after the Organization of Petroleum Exporting Countries opted not to reduce its production quota. Falling oil prices will put “short-term pressure” on Iran’s budget, President Hassan Rouhani said in parliament yesterday, the Iranian Students’ News Agency reported.
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