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Crude Oil Retreats 3% As Global Supply Concerns Ease

Summary:
Crude oil futures retreated more than 3% to kick off the trading week, driven primarily by diminishing concerns over global supplies. Oil prices had rallied last week on a wide range of factors, including Hurricane Delta, Norway, and Libya, but those fears have eased and US crude has slipped below the crucial level again. November West Texas Intermediate (WTI) crude oil futures tumbled .21, or 2.98%, to .39 per barrel at 16:17 GMT on Monday on the New York Mercantile Exchange. US crude prices are coming off a tremendous 5% weekly gain, but they are still down more than 35% so far this year. Brent, the international benchmark for oil prices, is also plunging to start the trading week. December Brent crude futures fell .07, or 2.50%, to .78 a barrel on London’s ICE Futures

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Crude oil futures retreated more than 3% to kick off the trading week, driven primarily by diminishing concerns over global supplies. Oil prices had rallied last week on a wide range of factors, including Hurricane Delta, Norway, and Libya, but those fears have eased and US crude has slipped below the crucial $40 level again.

November West Texas Intermediate (WTI) crude oil futures tumbled $1.21, or 2.98%, to $39.39 per barrel at 16:17 GMT on Monday on the New York Mercantile Exchange. US crude prices are coming off a tremendous 5% weekly gain, but they are still down more than 35% so far this year.

Brent, the international benchmark for oil prices, is also plunging to start the trading week. December Brent crude futures fell $1.07, or 2.50%, to $41.78 a barrel on London’s ICE Futures exchange. Brent also enjoyed a strong performance last week, advancing more than 5%.

On Friday, Hurricane Delta, which was a Category 2 storm, slammed into Louisiana. The natural disaster resulted in 91% of crude production and 62% of natural gas output in the Gulf of Mexico shutting down. Now that the hurricane has passed, investors are looking to additional disruptions in the future as the hurricane season continues. It is unclear if traders have already priced in future hurricanes, but analysts say that you can anticipate higher prices, prompting workers to suspend operations.

Overseas, Norwegian oil and gas firms reached a wage agreement with workers that ended a potential strike that would have affected the production of more than 300,000 barrels per day (bpd) in the North Sea. Meanwhile, Libya’s state-owned National Oil Co. confirmed on Sunday that it had removed force majeure in the nation’s largest oil field, Sharara. It has an output capacity of about 300,000, but the area will start with 40,000 bpd.

The situation developing in Libya has some market observers concerned because rising production levels would impact members of the Organization of the Petroleum Exporting Countries (OPEC), particularly since the oil cartel has been trying to curb supply as part of efforts to lift prices.

Last week, the Baker Hughes oil rig count rose to 193, up from 189 in the previous week. This was the third consecutive week of an increase.

In other energy commodities, November natural gas futures rose $0.136, or 4.96%, to $2.877 per million British thermal units (btu). November gasoline futures slipped $0.0215, or 1.79%, to $1.1817 a gallon. November heating oil futures shed $0.0332, or 2.78%, to $1.1601 per gallon.

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Andrew Moran
I am a full-time professional writer. Prior to my self-employment, I worked as a reporter for Digital Journal covering the politics beat and The Toronto Times reporting on the city’s entertainment scene. I currently write mostly about business, marketing and finance

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