Oil Drops below $50, U.S. Stockpiles Rise

Oil extended losses below $50 a barrel amid speculation that U.S. crude inventories will expand, exacerbating a global supply glut that’s driven prices to the lowest level since April 2009.

West Texas Intermediate for February delivery dropped as much as $1.57 to $48.47 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since April 2009, and was at $48.86. The volume of all futures traded was about 71 percent above the 100-day average for the time of day.

Oil slumped almost 50 percent in 2014, the most since the 2008 financial crisis, after the Organization of Petroleum Exporting Countries resisted calls to cut output as it competes with U.S. producers. The market faces “more problems” this year, according to Morgan Stanley, with surging output in Russia and Iraq contributing to a surplus that Qatar estimates at 2 million barrels a day.

Futures fell as much as 3.1 percent in New York, declining for a fourth day. Stockpiles in the world’s biggest oil consumer probably rose by 750,000 barrels last week. A gauge of the dollar held near a nine-year high, diminishing the investment appeal of commodities, as the Federal Reserve weighs raising interest rates and amid concern that Greece will leave Europe’s currency union.

Oil Prices

The market is obsessed with the supply side. “Prices have dropped too fast and too far, but with the market this negative it’s hard to see a trigger which could turn the sentiment. If U.S. inventories are higher than expected, we could see Brent below $50 this week.”

Saudi Discount on Arab Light

Saudi Arabia, the world’s largest oil exporter, raised prices for shipping crude to Asia in February. Its main Arab Light grade will sell for $1.40 a barrel below the average of Middle East benchmark Oman and Dubai grades, according to a statement.

Last month, state-owned Saudi Arabian Oil Co. offered a $2 discount for Arab Light exports, the steepest in at least 14 years. The move was followed by Iraq, Kuwait and Iran, bolstering speculation that OPEC’s Middle Eastern producers were prepared to let prices fall to defend market share amid the North American shale boom.

Crude in Indian Basket Falls 15% to $49.22 in Two Weeks!

Time for Fall in Diesel, Petrol and Gas Price?

Crude Oil (Indian Basket) from 24 December 2014 to 6 January 2015 (Previous Trading Day Price)

Unit	24.12	26.12	30.12	31.12	01.01	02.01	05.01	06.01
($/bbl)	57.91	57.91	53.81	53.53	53.53	54.45	51.53	49.22
(Rs/bbl)	3674.97	3685.39	3430.39	3390.05	3389.52	3446.14	3266.49	3120.06
(Rs/$)	63.46	63.64	63.75	63.33	63.32	63.29	63.39	63.39

Source: Ministry of Petroleum & Natural Gas