Oil prices were down in the market by more that 2 percent in the first official trading day of 2017 while the U.S. dollar rallied to its highest level since 2002 traders taking advantage of the profit.
Before the recorded drop, both benchmarks, Brent futures and Texas Intermediate, hit their highest levels since July 2015. Where in Brent traded as high as $58.37 and WTI was being traded at $55.24. The rise in price was supported by the hopes that the deal between OPEC countries would cut production in order to stop the global overproduction crisis.
James Williams, president of energy consultant WTRG in Arkansas stated that “It’s hard to justify a swing that big in a single day. The strong dollar certainly played a part in the decline and so did WTI hitting $55 a barrel”
Brent futures fell $1.35, or 2.4 percent, to settle at $55.47 per barrel, while the U.S. West Texas Intermediate (WTI) crude lost $1.39 or 2.6 percent, and was last seen trading at $52.33, its lowest close in two weeks.
The Dollar hit a 14 year high against other currencies within the dollar index. This was the result after reports show that there was an increase in manufacturing which was more than what was expected by the investors in November. With that, dollar- denominated Crude was pressured by the strong USD which made expensive for users of other currencies.
In other regions, Libya, which was one of the two OPEC countries that were exempted from the cut, has increased its production to 685,000 barrels per day, in December while, Non-OPEC producer, Remained unchanged at 11,21 million barrels per day which was close to 30-year high.