Oil prices fell from 14-month highs above $80 a barrel during the week ending 29 October, following a stronger US dollar and a negative batch of data from the US.
The US’ benchmark December West Texas Intermediate (WTI) contract was trading at $77.50 a barrel on 29 October, down $3.20 from the $80.70 recorded a week earlier and $4.50 lower than the 14-month high of $82 a barrel on 21 October.
Europe’s December Brent contract was trading at $75.99 at the same time, down $3.11 from a week earlier.
The average price for the Opec basket of its member states’ 12 crudes was $75.53 on 28 October, down $0.84 from the $76.37 reported by the international oil cartel a week before.
Analysts attribute the fall to a strengthened US dollar, which had risen to $1.4785 against the euro from a 14-month low of $1.5047 on 21 October, and poor inventory data in the US.
On 28 October, the US’ Energy Information Administration, reported that stocks of crude oil and gasoline rose during the week ended 23 October. Crude oil inventories in the US increased by 800,000 barrels to 339.9 million barrels, while gasoline stocks rose by 1.7 million barrels to 208.6 million barrels.
Reports that Opec ministers had said they would increase member states’ production quotas if oil prices reached $100 a barrel also dampened prices, according to one London-based oil market analyst.
“The prices we have seen over the last few weeks show there is more optimism about the economy, but I think the Opec ministers’ comments are a bit of a wake-up call,” he says. “Stocks are still above historical averages in the US and demand is still way down from last year. There is no real reason for oil to be above $70 right now.”