Story by The Wall Street Journal
U.S. oil prices dipped below $50 a barrel Monday for the first time since April on continued concerns that global crude-oil supplies are overwhelming demand.
Light, sweet crude for August delivery settled down 74 cents, or 1.5%, to $50.15 a barrel on the New York Mercantile Exchange, the lowest settlement since April 2, after slipping as low as $49.85 a barrel earlier in the session. The August contract expires at settlement Tuesday.
The more-actively traded September contract closed down 77 cents, or 1.5%, to $50.44 a barrel.
Brent, the global benchmark, fell 45 cents, or 0.8%, to $56.65 a barrel on ICE Futures Europe.
After falling to near-six-year lows in March, oil prices rallied through April on expectations that cuts in U.S. oil drilling would lead to lower production. But prices have slid in recent weeks as output from the U.S. and other nations has stayed robust.
While oil consumption has risen this year, many analysts say demand is insufficient to eat away at the global glut of crude and that a drop in output is also needed.
Money managers, including hedge funds, cut their net bet on rising U.S. oil prices to the lowest point since March as of July 14, according to the Commodity Futures Trading Commission.
“There’s a lot of crude around, period. That’s what’s underlying all of this,” said Elaine Levin, president of energy brokerage Powerhouse. “The market’s taking a more bearish view, and here we are chipping away at $50.”
The recent Iranian nuclear deal added to concerns that more crude oil could be produced in the coming months.
The oil market has also been sensitive to currency moves this year. A stronger dollar makes oil, which is priced in dollars, more expensive for foreign buyers. The WSJ Dollar Index recently traded up 0.1%.
Other commodities, including gold and copper, also fell Monday.
“The dollar strength is a big part of why we’re down here,” said Tony Headrick, an analyst at CHS Hedging LLC. But he said prices are unlikely to stay below $50 a barrel because of the strong growth in consumption: “I think people will be viewing it as a buying opportunity if prices get into the upper $40s.”
Gasoline futures settled up 0.17 cent, or 0.1%, at $1.9303 a gallon. Diesel futures fell 0.57 cent, or 0.3%, to $1.6584 a gallon, the lowest settlement since Jan. 29.