Bear haunts Oil on surging supplies

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Crude oil futures slumped in the domestic market on Thursday as investors and speculators exited positions in the energy commodity tracking a weak trend in the overseas market as oil output from the US rose to the highest level in more than three decades and the OPEC, which accounts for about 40 per cent of global supply, was unlikely to cut production, raising fears of a global supply glut.

The US pumped in 8.97 million barrels of crude per day, the most since January 1983, the EIA said. Collective OPEC output next year may remain close to 2014's 30 million barrels per day while the OPEC doesn't face a critical situation due to the oil price slump, the group's Secretary-General Abdalla El-Badri said.

A stronger dollar curbed the demand for oil as an alternative asset. Stronger greenback makes oil more expensive for those holding other currencies, thus dimming demand.

Investors cast aside robust US economic data which showed better than estimated growth in the world's biggest economy last quarter. The US economy grew by an annualized 3.5 per cent in the July-September 2014 quarter, beating estimates of a 3 per cent gain. Further, firings in the US remained near 14- year lows as jobless claims rose 3,000 to 287,000 last week.

Crude oil futures may continue the downward journey today on fears over abundant supplies in the global oil market.

At the MCX, Crude Oil futures, for the November 2014 contract, closed at Rs 5,017 per barrel, down by 1.30 per cent, after opening at Rs 5,080, against a previous close of Rs 5,083. It touched an intra-day low of Rs 4,980.

Story first published: Friday, October 31, 2014, 12:50 [IST]
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