U.S. Crude Dips Below $50

Oil futures fell on Wednesday, with U.S. prices settling below a barrel for the first time since early April.

US prices are off more than 20 per cent since their highs in June, meeting a common definition of a bear market.

Shale drillers were hoping for an increase in price per barrel as the dollar weakens.

The global supply glut is also taking its toll on the products market.

Data from the Energy Information Administration (EIA) revealed a 2.5 million increased US crude oil inventories last week, putting pressure on oil.

Oil prices have taken a new tumble over concerns about return of Iran’s crude to the market and a strong dollar.

“Barrels from the U.S. are on a collision course with barrels coming out of Iran, Saudi Arabia and elsewhere”, she said.

WTI crude price has fallen amid speculations about possible oil deliveries from Iran.

“The drop back into a bear market shows that the people who bought oil in the second quarter are realizing the market is still oversupplied”, said Giovanni Staunovo, an analyst at UBS AG in Zurich.

Brent for September settlement dropped 91 cents, or 1.6 per cent, to $US55.22 at 2.32pm on the London-based ICE Futures Europe exchange.

The contract for August delivery, which expired at the end of trading Tuesday, had briefly slipped below $50 per barrel on Monday and Tuesday before closing higher. The reason for this development is the freshly released weekly report by the U.S. government which showed that crude supplies unexpectedly rose.

Both benchmarks are on track to post double-digit losses in July, in part pulled lower by the expectation of higher Iranian exports following a deal over its nuclear programme with world powers. “It’s hard not to see oil hitting $100 a barrel at some point in the next five years”.

The recent weakness in the crude oil markets was largely driven by the strong US dollar-which made the commodity futures more expensive for foreign investors-and fears of supply continuing to exceed demand.

The number of Americans filing new applications for unemployment benefits last week fell to its lowest level since 1973, suggesting a continuing solid pace for job growth.

The removal of sanctions will cover, among other things, all bans on Iran’s Central Bank, shipping, oil industry, and many other companies.