On Thursday, oil prices dropped steeply since the dollar strengthened on remarks from European Central Bank President Mario Draghi. The central bank announced that it planned to buy corporate bonds as part of its quantitative easing program in June. A firmer greenback led dollar-denominated commodities more expensive to other currencies holders. The 1.6-percent slide in the Philadelphia Fed Index, which indicated constrain on the manufacturing sector, also affected on oil prices, commented a broker. Benchmark Brent crude futures plunged 61 cents at $45.19 a barrel by 11:23 a.m. ET (1523 GMT). U.S. crude futures lost 52 cents at $43.66. Oil futures prior hiked as the International Energy Agency (IEA) reported 2016 would see the biggest decline in non-OPEC production in a generation, benefiting to slash a global market glut.
IEA chief Fatih Birol mentioned cheap crude prices had reduced investment by about 40 percent in the last two years, with steep drops in the United States, Canada, Latin America and Russia. However, the cut in supply from some exporters could be slashed by mounting output in countries including Russia and Iran. Russia’s energy minister noted the country might lift crude output to recorded peaks. Iran has reiterated its intention to hit production of 4 million barrels per day, followed a global deal to freeze output fell apart and Saudi Arabia threatened to flood markets with more barrels.
“The focus of the market is primarily on price-supportive news and that’s just an indication of how sentiment is,” told a senior manager, suggesting fund flows into commodities had been robust this week, caused by an ease dollar. Previous this week, the greenback reached 10-month lows against a basket of chief currencies. The Thomson Reuters Core Commodity Index climbed to its historic peaks since early December. “This whole recovery has been driven by supply being capped and supply is price-sensitive and again we’re back to levels where we could see some of these producers breathe again,” the senior manager added.