Oil extends sell-off on Saudi policy continuity

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Crude oil futures slumped in the domestic and overseas market on Friday as investors and speculators exited positions in the energy commodity amid speculation that Saudi Arabia, the OPEC'S biggest oil producer, will continue with its OPEC'S current policy and refrain from cutting production even after the demise of King Abdullah who was instrumental in leading the cartel's decision in November to keep production steady at 30 million barrels per day despite a booming supply surplus.

Abdullah's successor Salman Bin Abdulaziz Al Saud said that he would maintain the policies of his predecessor while Saudi Prince Alwaleed Bin Talal Al Saud stressed that the country will not slash production to boost oil prices as other producers would fill in the gap.

American manufacturing expanded at the weakest pace in a year this month, signaling a slowdown in the world's biggest economy, clouding the demand outlook for the fuel. The index measuring US manufacturing fell to 53.7 in January from 53.9 in December, with a reading above 50 signaling expansion, Markit Economics said.

Further, US existing home sales rose by 2.4 per cent at an annual pace of 5.04 million in December from 4.92 million in November.

The US leading economic index rose for the fourth straight month, up by 0.5 per cent in December from November when it climbed 0.4 per cent.

Oil may extend a decline today amid worries over a worsening supply glut.

At the MCX, Crude oil futures, for the February 2015 contract, closed at Rs 2,837 per barrel, down by 1.87 per cent, after opening at Rs 2,887, against the previous close price of Rs 2,891. It touched an intraday low of Rs 2,822 till the closing.

Story first published: Tuesday, January 27, 2015, 12:50 [IST]
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