By Scott DiSavino
| NEW YORK
NEW YORK Oil fell more than 2 percent to its lowest in three months on Monday, as the prospect of another year of oversupply and weak prices overshadowed chances OPEC will reach a deal to cut output.Donald Trump's surprise win in last week's U.S. presidential election boosted the dollar and stocks but undermined oil. Crude has also fallen because of waning expectations that the world's largest exporters will agree to reduce production this month.Brent fell $1.11, or 2.5 percent, to $43.64 a barrel by 11:32 a.m. EST (1632 GMT). U.S. crude fell $1.12, or 2.6 percent, to $42.29 per barrel. Both contracts were down for a third day in a row to their lowest levels since Aug. 11.The Organization of the Petroleum Exporting Countries plans to cut or freeze output, but some analysts doubt the group's ability to reach an agreement at its meeting on Nov. 30. "Complex seeing further downside pressures amidst increasingly bearish balances, U.S. dollar strength and lack of OPEC confidence," Jim Ritterbusch, president of Chicago-based energy advisory Ritterbusch & Associates, said in a note.
OPEC said on Friday its output hit a record 33.64 million barrels per day in October, and forecast an even larger global surplus in 2017 than the International Energy Agency on Thursday. Yet, Saudi Energy Minister Khalid al-Falih has said it was imperative for OPEC to reach a consensus on activating a deal made in September in Algiers to cut production. "OPEC know what needs to be done but too few members will agree to take the production pain for the price gain, knowing also that the price gain incentives non-OPEC to produce more, lengthening the rebalancing process," PVM Oil Associates analyst David Hufton said.
The dollar index hit an 11-month peak on Monday, driven by an aggressive sell-off in bonds that has pushed Treasury yields to their highest since January. Ordinarily, a strong dollar would push greedback-denominated oil lower, but the correlation between the two is at its most positive in two months, suggesting they are more likely to move in lock step with one another than in opposite directions.
Data from the InterContinental Exchange on Monday showed investors delivered the largest weekly cut on record to their bets in the week to Nov. 8 on a sustained rise in the price of Brent. The U.S. crack spread, meanwhile, fell to $12.53 a barrel earlier on Monday, its lowest since Oct. 14. (Additional reporting by Amanda Cooper in London and Osamu Tsukimori in Tokyo; Editing by Marguerita Choy)
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Updated Date: Nov 14, 2016 23:00:07 IST