Crude Oil Ends Lower On First Trading Day Of 2015

(RTTNews) - U.S. crude oil ended at a more than 5-1/2-year low on the first trading day of the new year Friday, with continued worries over a global supply glut, belying hopes for a recovery any time soon. This is the lowest close for a most-active contract since April 2009.

U.S. commercial crude inventories declined more than expected last week, falling by 1.8 million barrels, a report from the official U.S. Energy Information Administration showed Wednesday.

Crude oil skirted its lowest in more than five years Friday morning, on the first trading day of 2015, even as volumes continued to remain thin. Overnight gains were wiped out as traders in the U.S. returned to work this morning after the holiday break.

Still, crude oil prices have dropped six weeks in a row amid signs that global market is oversupplied. OPEC producers, namely Saudi Arabia, are reportedly comfortable with the dramatic fall in crude prices, as they wish to cripple competitors and diminish the appeal of renewables.

Some soft economic data from the U.S. also weighed on oil with the U.S. manufacturing sector dropping to a six-month low in December, after a slight slowdown in growth in the previous month. Construction spending in the U.S. also dropped unexpectedly in November, due primarily to a steep drop in spending on public construction.

Light Sweet Crude Oil futures for February delivery, the most actively traded contract, dropped $0.58 or 1.1 percent to close at $52.69 a barrel on the New York Mercantile Exchange Friday.

Crude prices for February delivery scaled a high of $55.11 a barrel intraday and a low of $52.03.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 91.02 on Friday, up from its previous close of 90.28 late Thursday in North American trade. The dollar scaled a high of 91.07 intraday and a low of 90.33.

The euro trended lower against the dollar at $1.2015 on Friday, as compared to its previous close of $1.2098 late Thursday in North American trade. The euro scaled a high of $1.2099 intraday and a low of $1.2005.

On the economic front, the ISM said its purchasing managers index dropped to 55.5 in December from 58.7 in November. Economists had expected the index to drop to 57.5. With the bigger than expected decrease, the index is at its lowest since hitting 55.3 in June.

The U.S. Commerce Department said construction spending fell 0.3 percent to an annual rate of $975.0 billion in November from the revised October estimate of $977.7 billion. The drop came as a surprise with economists anticipating an increase of about 0.5 percent.

From the eurozone, German manufacturing sector returned to growth, as initially estimated in December, as new orders expanded for the first time in four months, final data from Markit Economics showed Friday. Germany's Purchasing Managers' Index rose to 51.2, in line with flash estimate, from November's 17-month low of 49.5.

Nevertheless, the French manufacturing sector contracted more than initially estimated to a four-month low in December, with the PMI dropping to 47.5 in December from 48.4 in November, below the flash estimate of 47.9.

European Central Bank President Mario Draghi said the risk of deflation in the euro area had risen over the months, with the central bank preparing to react to such threats, if necessary. Draghi's comments suggest that the ECB is moving closer to unleashing full-blown quantitative easing, including sovereign bond purchases, which dragged the euro to its lowest level in more than four years.