OCTOBER 3, 2017 – Futures fell the most in more than three weeks after Saudi Arabia and at least three other OPEC nations pumped more crude last month. Meanwhile, escalating prices spurred additional U.S. exploration, a bearish signal from a production point of view. The dollar also strengthened, diminishing the appeal of commodities.
Oil entered a bull market last week on signs that rising demand and production cuts by the Organization of Petroleum Exporting Countries and allies such as Russia were reducing a global surplus. Turkey’s threat to halt exports of Kurdish crude also put traders on edge.
West Texas Intermediate for November delivery declined $1.09, or 2.1 percent, to settle at $50.58 a barrel on the New York Mercantile Exchange, the biggest one-day decline since Sept. 8. Total volume traded was about 22 percent below the 100-day average. Prices climbed 9.4 percent in September, the biggest monthly increase since April 2016.
Brent for December settlement fell 67 cents to end the session at $56.12 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.22 premium to December WTI.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, rose as much as 0.5 percent. A stronger U.S. currency reduces the appeal of dollar-denominated raw materials as an investment.
“There’s a lot of crude oil in storage still and OPEC, who knows what can happen there. They’ve been pretty good with the compliance levels, but that can slide at any given moment,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. “This market was really over-bought. It was a nice run, but you can’t just continue to go straight to the moon forever.”