Crude Oil Plunges To End Near $93

(RTTNews) - U.S. crude oil plummeted over two percent to end at a near six-month low Tuesday, after both the Organization of the Petroleum Exporting Countries and the International Energy Agency painted a brighter supply outlook for crude oil. Investors were also weighed down by prospects of the Federal Reserve slashing its monthly bond-buying program as early as the year end.

The Organization of the Petroleum Exporting Countries maintained its 2014 world oil demand growth forecast, while nudging up the growth forecast for 2013. In its monthly Oil Market Report on Tuesday, the OPEC maintained its 2014 global oil demand forecast at 1.04 mbd and nudged up 2013 forecast by 34,000 barrels per day based on actual and preliminary data for the first half of the year.

On the supply side, non-OPEC oil supply is estimated to increase by 1.2 mbd in 2013 and forecast to grow by 1.2 mbd in 2014. The US, Canada, Brazil, South Sudan & Sudan, Kazakhstan and Colombia are expected to be the main contributors to next year's growth, while Norway, the UK, Syria, and Mexico are anticipated to see the largest declines.

Meanwhile, the International Energy Agency has predicted the U.S. would become the world's largest oil producer by 2020. In its World Energy Outlook, the IEA while brushing aside suggestions that unconventional resources like shale oil could weaken OPEC supplies, predicted increased production from the U.S, Canada and Brazil over the next 20 years.

Light Sweet Crude Oil futures for December delivery, the most actively traded contract, plunged $2.10 or 2.2 percent to close at $93.04 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for December delivery scaled a high of $95.22 a barrel intraday and a low of $92.86.

Yesterday, oil settled marginally higher after talks between Iran and Western nations on the Middle-East country's nuclear program and related sanctions failed and as the dollar weakened against a basket of major currencies. Oil also found support with a slew of upbeat trade data from China and some better-than-expected jobs data from the U.S. last week, raising the demand outlook prospect for oil.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.13 on Tuesday, up from 81.08 late Monday in North American trade. The dollar scaled a high of 81.46 intraday and a low of 81.02.

The euro traded higher against the dollar at $1.3441 on Tuesday, as compared to its previous close of $1.3406 late Monday in North America. The euro scaled a high of $1.3456 intraday and a low of $1.3360.

In economic news from the euro zone, Germany's EU harmonized inflation weakened in October at a faster pace than estimated earlier, final figures released by the Federal Statistical Office showed. The harmonized index of consumer prices advanced 1.2 percent in October from the same month of last year, slightly slower than the 1.3 percent gain the government had estimated earlier. In September, prices had recorded a 1.6 percent increase.

Germany's wholesale trade prices declined at the fastest rate since late 2009 in October, data released by Destatis showed. The wholesale price index fell 2.7 percent year-on-year, following a 2.2 percent drop in September. The index dropped for the third successive month and the rate of decline was the biggest since November 2009, when prices decreased 3.7 percent, the agency said.

Elsewhere, U.K. inflation slowed more than expected in October to the lowest since September 2012, official data showed. Nonetheless, it hovers above the 2 percent target. Consumer price inflation dipped to 2.2 percent from 2.7 percent in September, the Office for National Statistics said. It fell below the 2.5 percent consensus.

An indicator of the performance of the British economy rose sharply in September, indicating that the ongoing recovery will continue in the coming months, survey data published by the Conference Board showed. The leading economic index advanced 1.5 percent sequentially to 107 in September. This followed a 1.2 percent gain in August and a 0.7 percent rise in July. Six of the seven components that constitute the leading index made positive contributions in September.