A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015. Reuters/Nick Oxford
Crude futures plunged on Monday, with U.S. oil dropping more than 3 percent on a firmer U.S. dollar and festering worries over a global supply surplus.
The fall was part of a wider decline in commodities that has also been stoked by worries over faltering demand from China, with prices for base metals such as copper and nickel tumbling.
U.S. crude’s West Texas Intermediate (WTI) January contract CLc1 had fallen $1.16, or 2.77 percent, to $40.74 a barrel by 0740 GMT. It hit $40.59 earlier in the session, near levels seen on Friday before the December contract expired.
Benchmark front-month Brent futures for January LCOc1 lost 80 cents, or 1.79 percent, to $43.86 a barrel, recovering from a session-low of $43.69.
“With the stronger U.S. dollar, all of copper, gold and oil fell after Asian trading began … there were also some selloffs which were not made last Friday,” said Kang Yoo-jin, commodities analyst at NH Investment and Securities in Seoul.
Kang said in a separate note that oil markets would only rebound if U.S. crude inventories dropped, although declining U.S. output and seasonal demand would offer some support at low prices.
The euro hit a seven-month low versus the U.S. dollar on Monday, with a stronger greenback making dollar-denominated oil contracts more expensive for holders of other currencies. [USD/]
But Daniel Ang at Phillip Futures…