Oil Prices Follow Equities Lower as Dollar Climbs
December 14 2018 - 12:43PM
Dow Jones News
By Christopher Alessi
-- Oil prices weakened Friday, hit by global growth concerns and a stronger
U.S. dollar.
-- Light, sweet crude for January delivery fell 1.8% to $51.65 a barrel on
the New York Mercantile Exchange.
-- Brent, the global benchmark, declined 1.3% to $60.65.
HIGHLIGHTS
Global Growth: The strength of the global economy once again
came into question Friday after Chinese data showed a slowdown in
industrial production in November. Meanwhile, growth in retail
sales fell to its lowest level in more than 15 years.
The Dow Jones Industrial Average declined more than 350 points,
down 1.5% Friday. The S&P 500 fell 0.6%, and the Nasdaq
Composite dropped 1.1%.
Dollar Pressure: A stronger U.S. dollar, combined with volatile
equity markets, have weighed down crude, said Giovanni Staunovo,
commodities analyst at UBS Wealth Management. Dollar-denominated
commodities like oil tend to have an inverse relationship with the
greenback, which was up 0.4% Friday morning, according to the WSJ
Dollar Index.
But Mr. Staunovo said that overall "I would think oil prices are
in a position of stabilizing around this level," aided by planned
production curbs from the Organization of the Petroleum Exporting
Countries and its allies outside the cartel, including Russia.
INSIGHT
IEA Report: The International Energy Agency said Thursday that
commercial oil stocks in the Organization for Economic Cooperation
and Development rose by 5.7 million barrels in October to stand at
2.872 billion barrels. That marks the first time commercial
petroleum inventories were above the latest five-year average since
March.
OPEC+: Oil-market participants continue to weigh whether a
decision by OPEC, de-facto led by Saudi Arabia, and production
allies led by Russia to cut crude output by a collective 1.2
million barrels a day next year will be enough to mop up a
burgeoning oil-supply glut. Prices had initially risen on news of
the deal last Friday by as much as 5%, before paring some of those
gains at the start of this week.
"It will be chiefly up to OPEC, and Saudi Arabia above all, to
bring the oil price under control by complying strictly with the
agreed production cuts," analysts at Commerzbank wrote in a note
Friday. "Saudi Arabia therefore intends to reduce U.S. exports in
the short term," they added.
AHEAD
-- Baker Hughes releases weekly data on the number of rigs drilling for oil
in the U.S., a key barometer for activity in the sector.
Stephanie Yang contributed to this article.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
December 14, 2018 12:28 ET (17:28 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.