Oil futures ended the first trading day of 2015 on the same note they finished 2014, sliding to another round of lows on a surging U.S. dollar and a global glut of crude, Marketwatch reports.
According to the business news medium, On the New York Mercantile Exchange, crude futures for delivery in February CLG5, -0.86% fell 58 cents, or 1.1%, to close at $52.69 a barrel, the lowest finish since April 2009. February Brent crude LCOG5, -1.43% on London’s ICE Futures exchange remained 13 cents lower at $56.29 a barrel, a loss of 0.2%.
Nymex WTI crude lost 45.87% through 2014, and Brent crude lost 48.26%, the largest one-year net and percentage decline since 2008 for both benchmarks.
Phil Flynn, senior market analyst at Price Futures Group in Chicago, said remarks by European Central Bank President Mario Draghi that indicated the institution will implement full-blown quantitative easing sooner rather than later and were credited with sending the euro to its lowest level versus the dollar since June 2010 played a key role in oil’s move lower. As the dollar strengthened on Friday, oil sold off.
Price action was choppy throughout the session, but in the end, oil was unable to sustain a bounce.
Meanwhile, the ICE U.S. dollar index DXY, +0.97% continued to climb, rising 0.9% Friday to its highest level in nearly nine years. The dollar’s strength is seen as a negative for commodities priced in dollars by making them more expensive to users of other currencies.
“It seems oil cares more about oversupply and the value of the dollar then Iran and their complaints” to Saudi Arabia over the plunge in oil prices, Flynn said, in a note.
Flynn was referring to signs of discord within the Organization of the Petroleum Exporting Countries.
Iran’s deputy foreign minister told Reuters that Saudi Arabia’s inaction over a six-month slide in oil prices was a strategic mistake. Many oil producers, including Saudi Arabia and companies like Royal Dutch Shell PLC RDSB, +0.11% RDSA, +0.67% have said in the past that $100 a barrel is an optimum level for oil.
For several oil-exporting countries like Iran, Nigeria, Russia and even Saudi Arabia, government budgets and petrodollar revenues are being threatened by current oil prices, and analysts say price levels are unlikely to recover to $100 in 2015.
Also read: The plunge in oil prices will hurt these people most
Nymex reformulated gasoline blendstock for February RBG5, -3.43% the benchmark gasoline contract, fell by more than 3 cents to $1.4392.
February natural gas futures NGG15, +2.39% rose 10 cents, or 3.5%, to to $2.989 per million British thermal units.
