Brent crude drops below $83

Reuters Singapore | Updated on November 07, 2014 Published on November 07, 2014

Brent crude dropped for the second straight session on Friday, dragged below $83 by worries over the strong US dollar.

The dollar held near a four-year high against a basket of major currencies, with its near-term fortunes hinging on whether US jobs data will add to or temper optimism about the US economy's outlook.

A stronger greenback makes it more expensive for holders of other currencies to buy dollar-denominated commodities.

“The market is assessing itself ahead of non-farm payrolls. More people employed means more oil demand,’’ said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.

Brent had dropped 47 cents to $82.39 a barrel by 0424 GMT after falling as much as 90 cents the session before. It has fallen around 4 per cent so far this week.

US crude eased 28 cents to $77.63 a barrel.

“I do think we've reached an area where some people are happy for the market to trade lower, but when I look at it, its close to its lowest,’’ Barratt said.

Brent prices on Wednesday gained slightly and US crude jumped nearly 2 per cent after inventory data showed US crude stocks were just a fifth of levels forecast last week.

A meeting of OPEC ministers on November 27 to discuss how to react to the drop in oil prices could give direction to oil prices, said Mark Keenan, head of commodities research at Societe Generale in Singapore.

“We have a 30-40 percent probability that there will be a cut (in output) of some kind,’’ he added.

Investors are also eyeing the situation in Ukraine after Russian President Vladimir Putin held talks with top security chiefs on Thursday amid accusations by pro-Russian rebels Kiev had launched a new offensive.

Elsewhere, Libya hopes to reopen the southern El Sharara oilfield “very soon’’ after it resolve a conflict between local tribes following an attack by gunmen that shut the field on Wednesday, an oil official said on Thursday.

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Published on November 07, 2014
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