Crude Oil Plummets Over 4% On Mounting Supply Glut Worries

(RTTNews) - U.S. crude oil plunged 4.2 percent to end at fresh 5-year lows on Monday, on worries over health of the global economy with waning demand for oil, even as concerns of a supply glut heightened with analysts forecasting an over-supply scenario deep into 2015.

Despite a bigger than expected decline in U.S. crude oil inventories in the week ended November 28, oil has been sliding once again, hurt by OPEC's decision to maintain output at 30 million barrels a day and Saudi Arabia's move to cut prices for its U.S. and Asian customers.

Some soft economic data from China and Japan also impacted oil prices.

Official data from China showed some weak trade activity in the world's second largest economy, with both export and import missing expectations. Elsewhere in Asia, revised data showed Japan's economy in the third quarter to have contracted more than previously reported.

Light Sweet Crude Oil futures for January delivery, the most actively traded contract, plummeted $2.79 or 4.2 percent to close at $63.05 a barrel on the New York Mercantile Exchange Monday.

Crude prices for January delivery scaled a high of $65.55 a barrel intraday and a low of $63.05 - the lowest since mid July 2009.

On Friday, crude oil futures ended at $65.84 a barrel, down $0.97 or 1.5 percent, weighed down by concerns of a supply glut and Saudi Arabia's decision to slash prices for its customers in U.S. and Asia.

Oil firmed up early Friday on the back of an upbeat jobs report from the U.S. Labor Department that showed employment to have increased much more than anticipated in November even as unemployment rate remained unchanged.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 89.04 on Monday, down from its previous close of 89.33 late Friday in North American trade. The dollar scaled a high of 89.55 intraday and a low of 88.91.

The euro trended higher against the dollar at $1.2322 on Monday, as compared to its previous close of $1.2288 late Friday in North American trade. The euro scaled a high of $1.2329 intraday and a low of $1.2248.

In economic news, China's merchandise trade surplus came in at $54.47 billion in November, well above the forecast of $41 billion, following the $45.41 billion surplus in October.

China's exports rose at a slower than expected pace, rising 4.7 percent on year in November, while economists expected exports to rise 9.0 percent. China's imports tumbled an annual 6.7 percent versus forecast for a gain of 4.0 percent.

Japan's gross domestic product declined in the third quarter of 2014, downwardly revised to 1.9 percent on year, the Cabinet Office said in Monday's final reading - confirming the country's slide into recession. The headline figure missed the forecast for a decline of 0.5 percent, which would have been an improvement over the 1.6 percent decline in last month's preliminary estimate.

From the eurozone, German industrial production growth softened in October on a notable fall in energy output, official data revealed Monday. Industrial output grew 0.2 percent in October from a month ago, Destatis said. Production was forecast to rise 0.3 percent after expanding by a revised 1.1 percent in September.

Meanwhile, the French economy is expected to grow 0.1 percent in the fourth quarter as estimated in the prior month, survey data from the Bank of France showed Monday. The business confidence index rose marginally to 97 in November from 96 in October.

A slew of economic data are due this week, including weekly jobless claims, a report on retail sales for November and the preliminary consumer sentiment reading from Reuters and the University of Michigan. Investors will also be looking ahead to the U.S. Commerce Department's wholesale and business inventories report for October and the Labor Department's producer prices data for November.