OPEC decision knocks oil down, dollar gains

Fri Nov 28, 2014 2:49pm EST
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By Herbert Lash

NEW YORK (Reuters) - Crude oil tumbled on Friday, knocking down both energy-related shares and currencies after OPEC's decision a day earlier not to cut output reinforced prospects of a worldwide oil supply glut.

The dollar mostly strengthened following the decision by the Organization of Petroleum Exporting Countries on Thursday, a move that slammed commodity currencies like the Norwegian crown, which fell to five-year lows against the greenback and the euro.

The ruble weakened to more than 50 to the dollar in late trade, setting a new all-time low. The ruble has lost a third of its value this year as Western sanctions imposed due to the Ukraine crisis and falling oil weigh on the Russian economy.

Euro zone government bond yields held near record lows as declining energy prices cut into consumer price growth across the bloc and raised the chances of more stimulus from the European Central Bank on increased deflation fears.

A rout in U.S. and European energy shares weighed on equity markets. But other sectors edged higher, lifting Wall Street's Dow industrials and the Nasdaq, while several leading indexes in Europe pared losses in late trade to close slightly higher.

U.S. crude, or West Texas Intermediate, fell more than 10 percent and Brent crude fell another 3.3 percent after a 6.7 percent slide on Thursday. The sell-off since OPEC's decision amounts to about $67 billion in lost market value, Reuters estimates.

The slide could deepen when traders and investors return after Thursday's U.S. holiday and Friday's shortened session.

"There's a notion that yesterday's selling was overdone, but not everyone is fully back to work yet after Thanksgiving," said John Kilduff, partner at energy hedge fund Again Capital in New York. "WTI could certainly be down a couple of dollars more next week, and test newer lows from there."   Continued...

Traders are pictured at their desks in front of the German share price index DAX board at the Frankfurt stock exchange November 28, 2014.     REUTERS/Remote/Stringer