Brent Falls On Dollar's Strength
Brent crude oil looked set to finish the week below $83 as a strong dollar and oversupply concerns weighed. The commodity traded at $82.61 at 8:50 GMT as the dollar continued to rally.
Following the European Central Bank meeting, the dollar rose to a four-year high as investors saw the Federal Reserve’s policies diverging from the rest of the world’s central banks’. While the ECB committed to more easing on Thursday, the Fed finished its quantitative easing program last month and is seen as likely to raise interest rates some time in 2015.
U.S. data due out later in the day could impact crude prices as non-farm payrolls data could help lift Brent prices. If the figure is positive, crude prices may see a lift as it would indicate that the top oil consuming nation’s economy is on solid ground, thus improving the demand for oil.
Related Link: Euro Sinks After ECB Hints At More Easing
Investors are also looking to OPEC for any indication that the cartel is planning to implement a supply cut in order to boost prices. Many of the group’s members require prices to be above $100 in order to balance their budgets, but some have said they are comfortable accepting the commodity’s low price if it means they can gain market share. CNBC reported that the group remains divided over the issue, and that some analysts see a 30 to 40 percent chance of an output cut.
Moving forward many expect to see Brent prices to fall lower, as the dollar continues to strengthen. However as winter approaches, U.S. shale oil production will probably slow, leaving some room for Brent to rise.
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