Prices of oil plummet due to surging U.S. crude supply

Thursday, prices of oil suffered another fall as U.S. output relentlessly kept on rising and now hovers above 10 million barrels per day threatening the Organization of Petroleum Exporting Countries’ efforts to tighten markets and boost prices. According to the EIA, the United States increased its 2018 average supply forecast to 10.59 million barrels per day, adding a massive 320,000 barrels per day compared to the previous forecast in previous weeks. 

The international benchmark, Brent Crude Futures, plunged into its lowest point in 2018 closing at $65.12 bpd early in the session, but finally settled at $65.20 a barrel - 0.5% or 31 cents lower than previous settlement. United States West Texas Intermediate settled at $61.46 per barrel, after dropping by 0.5%, or 33 cents.

U.S. dollar maintains its strength

Supported by higher United States Treasury yields and a weaker euro, the greenback climbed above its recent lows against its major currency rivals. According to the dollar index, the United States dollar held firm and settled at 90.242, which was just an inch below its two-week high of 90.40 capped on Wednesday. Against the Japanese safe-haven yen, the dollar climbed slightly and ended at 109.37 yen JPY=. On the other hand, the euro rose against the dollar by approximately 0.1% and settled at $1.2278 – a little above Wednesday’s low of $1.2246.

Sumitomo Mitsui Trust Bank’s market economist, Ayako Sera, explained that the dollar was boosted by the higher U.S. Treasury yields on Wednesday. U.S. yield on benchmark 10-year Treasury notes on Wednesday settled at 2.816% in Asian trade - an inch near the U.S. settlement of 2.843.

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