Crude Oil Drops To End At $44 A Barrel

(RTTNews) - U.S. crude oil prices plunged to end lower on Monday, on some disappointing economic data from China and after the Organization of the Petroleum Exporting Countries, or OPEC, cut its supply forecast for U.S. producers.

Oil prices were also impacted by some crucial economic data from China, with industrial production in the world's second largest economy rising at a slower-than-expected pace in August. Nonetheless retail sales growth exceeded expectations, data from the National Bureau of Statistics showed Monday.

"U.S. oil production has shown signs of slowing," OPEC said in the report. "This could contribute to a reduction in the imbalance of oil market fundamentals, however, it remains to be seen to what extent this can be achieved in the months to come."

OPEC lowered its projection for non-OPEC supply in 2015 by about 72,000 barrels a day, to 880,000 barrels a day.

Last week, Goldman Sachs slashed its target price for U.S. crude in 2016 to $45 from a previous forecast of $57. The analyst also cut its Brent oil price target for 2016 to $49.50 a barrel, from an earlier forecast of $62.

OPEC is pumping far more oil than it needs to in order to keep prices low and drive away competition from the U.S. and Canada.

Markets were under pressure with investors awaiting the outcome from the two-day Federal Open Market Committee meet scheduled to start tomorrow. The Fed will announce its policy decision Thursday afternoon, with analysts divided whether the central bank will raise interest rates. If a hike is indicated, then it would be the first since 2006.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, dropped $0.63 or 1.4 percent, to settle at $44.00 a barrel on the New York Mercantile Exchange Monday.

Crude prices for October delivery scaled a high of $44.97 a barrel intraday and a low of $43.59.

On Friday, crude oil tumbled $1.29 or 2.8 percent, to settle at $44.63, amid speculation global supplies will continue to outpace demand, even as Goldman Sachs projected a steep drop in oil prices in the near future.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.27 on Monday, up from its previous close of 95.11 in late North American trade on Friday. The dollar scaled a high of 95.45 intraday and a low of 94.91.

The euro trended lower against the dollar at 1.1312 on Monday, as compared to its previous close of 1.1338 in North American trade late Friday. The euro scaled a high of 1.1374 intraday and a low of 1.1285.

On the economic front, China's industrial production increased at a slower-than-expected pace in August, while retail sales growth exceeded expectations, figures from the National Bureau of Statistics showed Monday.

Industrial production climbed 6.1 percent year-over-year in August, slightly faster than previous month's 6.0 percent rise. Economists had expected a 6.3 percent growth for the month.

Retail sales growth improved to 10.8 percent annually in August from 10.5 percent in July. The expected rate of increase was 10.6 percent.

Eurozone industrial production rose for the first time in three months and exceeded economists' expectations, suggesting that a positive contribution to growth is likely in the third quarter.

Industrial production rose 0.6 percent month-on-month following a 0.3 percent slump in June, which was revised from a 0.4 percent fall. Economists had expected a 0.3 percent gain. The growth was also the biggest since February, when production rose 0.9 percent.