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Crude oil slumps to fresh 4-1/2-month low with U.S. supplies in focus

Published 11/05/2013, 09:10 AM
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Investing.com - Crude oil futures fell to the lowest level since June on Tuesday, as ongoing concerns over rising U.S. inventories and weaker demand in the world's largest oil consumer drove prices lower.

On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD94.06 a barrel during U.S. morning trade, down 0.7%.

New York-traded oil futures fell to a session low of USD93.94 a barrel earlier, the weakest level since June 26.

The December contract settled little changed on Monday to end at USD94.62 a barrel.

Oil futures were likely to find support at USD93.71 a barrel, the low from June 26 and resistance at USD96.64 a barrel, the high from November 1.

Oil prices were pressured by a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.15% to trade at 80.78.

Oil traders looked ahead to the release of fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 1.8 million barrels.

Crude oil inventories rose by 4.1 million barrels last week to 383.9 million barrels, the highest level since June.

U.S. crude prices have been on a downward trend in recent weeks amid concerns the recent U.S. government shutdown created a drag on economic growth and eroded demand in the world’s largest oil consumer.

Market players also eyed the release of key U.S. economic data later in the week to help assess the timing for a reduction in the Federal Reserve’s bond-purchasing program.

The U.S. is set to release preliminary data on third quarter economic growth on Thursday, while October’s highly-anticipated nonfarm payrolls report is scheduled for Friday.

The Fed sounded more optimistic than anticipated in its assessment of the economy following its policy-setting meeting last week, sparking speculation the central bank could start tapering stimulus at its December meeting.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery dipped 0.15% to trade at USD106.09 a barrel, with the spread between the Brent and crude contracts standing at USD12.03 a barrel.

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