Brent To Post Largest Monthly Loss In 2 Years
Brent crude oil looked likely to post its largest monthly loss in about two years on Friday as the commodity traded at $85.52 at 8:30 GMT, hurt by a strong dollar and oversupply concerns.
Data out on Thursday showed that the U.S. economy beat expectations in the third quarter, growing at 3.5 percent rather than the 3.0 percent that was expected. The figure helped propel the dollar, which in turn was negative for Brent prices.
However, some analysts believe that the GDP report at face value doesn’t tell the whole story. Many have trimmed their fourth quarter GDP estimates as they believe this quarter’s GDP figure is based mostly on defense spending and inventories, so the fourth quarter is likely to be worse than anticipated.
Meanwhile, most commodities investors remain focused on OPEC with the group’s monthly meeting coming up at the end of November. While several of the cartel’s members require prices to be above $100 in order to balance their budgets, the group is not expected to cut supplies, as many members are willing to accept low prices for an extended period in order to gain market share.
CNBC reported that OPEC Secretary General Abdullah al-Badri remarked that the group should cut output by 500,000 barrels per day, something he believes will keep prices above $95 per barrel. If the group decides against cutting down supplies as both Saudi Arabia and Iran suggested, some analysts say that the commodity’s price could fall as low as $75 per barrel. At its current output level, OPEC’s supply is forecast to outpace global demand by around 2.8 million barrels per day by mid-2015.
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