Stocks are not the only asset class that is correcting. After running up nicely in recent months, oil is retreating and the reason may be more about production levels and a recently rising dollar than the stock-market selloff.
Share of West Texas crude fell 2.27% to $59.76 a barrel in late morning trading Friday, while Brent fell 2.02% is $63.50.
The downward move began earlier this week with the stock market’s slip and it continued with the Energy Information Administration reporting that the U.S. have breached the 10-million-barrel per day oil production threshold for the second time since last November—and apparently much earlier than most observers expected, according to Oilprice.com
“U.S. drillers produced 10.25 million barrels of oil daily last week, the EIA said in its weekly petroleum report, and prices slumped further as doubts about the global oversupply—which is still lingering—were reignited,” Oilprice.com said.
With talk that oil was trading with a bit of bubble psychology, it wouldn’t be a surprise to see crude fall further. Any increases in the dollar, which tends to move inversely to oil, could provide the assist. The good news, however, is that few analyst are questioning that global economic growth is for real.
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