Oil prices fell for the third straight session on Friday as a higher US drilling rig count added to gloom over a market glutted with petroleum.
US benchmark West Texas Intermediate for January delivery dropped US$0.22 to US$34.73 a barrel on the New York Mercantile Exchange, a fresh low since February 2009.
In London, Brent North Sea crude for delivery in February fell US$0.18 to US$36.88 a barrel.
The Baker Hughes US oil rig count showed an increase of 17 for the week ending Friday to 541 rigs, data that stokes concern that production will stay high.
Kyle Cooper of IAF Advisors said the gain in the drilling rigs should be seen in the context of the count already being “very low” compared with last year’s 1,536.
However, “the fundamentals still support the downtrend” in oil prices, Cooper said.
Oil prices have fallen from more than US$100 a barrel in July last year due to high output from the US and key members of the OPEC, which has not cut output in response to the rout.
This week’s decision by the US Federal Reserve to hike US interest rates has also pressured oil by lifting the greenback. A stronger US dollar dents demand for US-dollar oil in international markets.
Even with global surpluses and slowing economies keeping prices low for everything from crude oil to wheat, demand might weaken, especially from major importers in Asia like China and India, which have been key drivers of commodity buying.
“The currency movement due to the US rate increase will have a direct impact on our business,” said Kazuo Kagami, the president of Toho Titanium Co, which makes a lightweight, super-strong alloy used in everything from airplane parts to golf clubs.
All sorts of raw materials have global surpluses after heavy investment in new production over the past decade boosted supplies.
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