U.S. crude oil plunged to end at a near two-week ended low for a third straight session Wednesday, as the Energy Information Administration cut its crude oil price forecast for the year.
The Energy Information Administration in its monthly report indicated WTI prices to average $49.23 a barrel this year, which is down from a prior forecast of $49.62. The EIA also lowered its forecast for 2016 to $53.57 a barrel from the previous projection of $54.42.
The agency has also lowered its 2015 forecast for Brent to $54.07, from a previous forecast of $54.40.
U.S. crude-oil output is expected to decline to 9.22 million barrels a day this year, as compared to a prior estimate 9.36 million barrels. The EIA also lowered its 2016 U.S. crude-oil output forecast to 8.82 million barrels a day, down 1.5 percent.
Meanwhile, European and Asian stocks rallied, putting markets in a decent mood elsewhere. Rebounding stocks could mean the Federal Reserve will raise interest rates next week, denting commodities prices.
Russia and OPEC continue to pump crude oil at a breakneck pace despite low prices and mounting global supplies. The cartel believes a price war will hurt U.S. and Canadian competition and stave off the adoption of alternative fuels.
Light Sweet Crude Oil futures for October delivery, the most actively traded contract, plunged $1.79 or 3.9 percent, to settle at $44.15 a barrel on the New York Mercantile Exchange Wednesday.
Crude prices for October delivery scaled a high of $46.26 a barrel intraday and a low of $44.09.
On Tuesday, crude oil slipped $0.11 or 0.2 percent, to settle at $45.94 a barrel, after the dollar trended higher as investors turned to the more riskier equity assets with most major global stock markets on the rise.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.23 on Wednesday, up from its previous close of 95.86 in late North American trade on Tuesday. The dollar scaled a high of 96.41 intraday and a low of 95.86.
The euro trended lower against the dollar at $1.1166 on Wednesday, as compared to its previous close of $1.1204 in North American trade late Tuesday. The euro scaled a high of $1.1213 intraday and a low of $1.1133.
On the economic front, U.K. industrial production dropped unexpectedly and the visible trade gap widened to the highest level in a year in July largely due to a strong pound, suggesting a weak start to the third quarter.
Industrial output dropped 0.4 percent on a monthly basis in July, having had an equivalent fall in the prior month, the Office for National Statistics said Wednesday. Economists had forecast 0.1 percent growth for July. This was the second consecutive fall in production.
UK visible trade deficit widened for a second straight month in July to its biggest level in a year, exceeding economists’ expectations, figures from the Office for National Statistics showed Wednesday. The deficit in the trade in goods rose to GBP 11.082 billion from GBP 8.507 billion in June. Economists had forecast a GBP 9.5 billion shortfall.
British shop prices declined for the twenty-eighth consecutive month in August, defying expectations for a slower drop, the British Retail Consortium said on Wednesday. Shop prices fell 1.4 percent year-over-year in August, the same rate of decrease as in the previous month. Economists had forecast only a 0.2 percent drop for the month.
The material has been provided by InstaForex Company – www.instaforex.com