GO
Loading...

Oil Drops More Than $2 to Below $69 on Demand Concerns

Oil dropped more than two dollars on Friday, weakened by selling in equity markets that raised doubts over energy demand and after a storm that halted exports from Oman lost power.

London Brent crude, seen as more representative of the global market, fell, as did U.S. crude.

Prices for base metals also fell sharply, as traders predicted demand across the global commodities complex could be eroded.

"Both these groups (metals and equities) have sold off sharply of late, unnerved by prospects of rising interest rates and the implications that this could have on economic growth," Edward Meir wrote in his Man Energy Daily Report.

There is no evidence yet of a major change in investment strategy, but analysts said they would monitor cash flows.

"We are keeping a close eye on liquidity at the moment," said Anatol Feygin of Bank of America. "It can be the start of a fundamental change in flows and risk perception."

Oil began to slide early on Friday after Cyclone Gonu lost strength, allowing Gulf producer Oman to resume exports following a three-day halt.

Oman's Mina al-Fahal, the country's only terminal for its 650,000 barrels per day (bpd) of crude exports, resumed operations on Friday, a shipping source said.

Prices have been underpinned by OPEC's reluctance to increase output.

Brent crude almost matched the $71.80 high hit in late May after the president of the Organization of the Petroleum Exporting Countries said on Thursday there was no need for an emergency meeting.

Consumers have been urging the group to reconsider its current production ceiling.

The market was also briefly ruffled on Thursday by a report Turkey was launching a major incursion into oil producing northern Iraq.

A military source said troops had conducted a limited raid, but Turkey denied it was on a major scale.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Don't Miss

U.S. Video