Crude-oil futures fell in Asian trade Monday with the U.S. oil
benchmark dropping to its lowest level in more than 5 1/2 years as
financial markets reeled in the wake of Greece's elections.
Oil traders were cautious after Greek leftist party Syriza won
Sunday's vote, pushing the euro to its lowest levels in more than a
decade against the U.S. dollar and Japanese yen in Asia trade.
A steady appreciation in the U.S. dollar has weighed across
prices of commodities, especially oil, which is
dollar-denominated.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in March traded at $45.03 a barrel at 0419 GMT, down
$0.56 in the Globex electronic session. It had fallen to as low as
$45.35 a barrel, but pared some early losses.
Brent crude for March delivery fell $0.46 to $48.33 a barrel on
London's ICE Futures exchange.
The Greek elections caused some panic selling for West Texas
Intermediate crude, which tested a new low within the first hour of
this week's trading, but markets have somewhat calmed since then.
WTI and Brent crude are expected to stay rangebound, analyst Daniel
Ang at Phillip Futures said.
"This would likely go on until fundamentals change for the
better," he said. He said currency markets could fluctuate more
with the release of the U.S. Federal Reserve's latest meeting
minutes later this week.
Nymex WTI crude lost 7.2% last week, settling at its lowest
value since March 11, 2009. It has been down for 15 of the past 17
weeks, posting sharper losses than Brent crude, which lost around
2.8% last week.
Oil analysts are closely monitoring weekly drilling activity in
the U.S. to get a sense of when the country's oil production will
decline in response to low prices.
Houston energy investment banking Tudor, Pickering, Holt &
Co. said a drop in the number of drilling rigs deployed in the U.S.
would balance oil markets by the end of 2015 as a production
slowdown becomes increasingly visible.
"A nearly 800-rig drop in our expected 2015 U.S. rig count
drives a move from growth to a 2016 contraction in U.S. oil
production," the bank said. It expects U.S. oil prices to rise from
$50 a barrel in the first half of this year, to $90 a barrel by the
end of 2016.
Morgan Stanley said shale-oil producers could be viable at an
oil price as low as $30 and as high as $100, but lower prices
should limit cash flow and spending, and restrict access to capital
for oil producers.
"However, when prices rebound, US shale producers will be able
to respond in 3-6 months," it said in its January energy outlook
report.
Nymex reformulated gasoline blendstock for February--the
benchmark gasoline contract--fell 146 points to $1.3333 a gallon,
while February diesel traded at $1.6443, 24 points lower.
ICE gas oil for February changed hands at $473.00 a metric ton,
down $4.00 from Friday's settlement.
Write to Eric Yep at eric.yep@wsj.com
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