Crude Oil Ends Below $48 On Supply Glut, Eurozone Worries

(RTTNews) - U.S. crude oil plummeted over four percent to end sharply lower on Tuesday, plunging to its lowest in more than five years ahead of the weekly official U.S. crude stockpile report with inventories expected to rise. Oil prices continued to be hampered by worries of a supply glut amid renewed concerns about the future of the eurozone.

With the falling crude prices, U.S. stocks also continued to drop sharply amid continued speculation over the probable exit of Greece from the euro region, depending on the outcome of the general elections scheduled for the end of January. A Greek exit could set off a domino effect should other eurozone members struggling to cope with austerity decide to leave the currency bloc as well.

Analysts believe the oil markets to be oversupplied with some even anticipating crude prices near $40 by months end.

Crude oil prices have plummeted from above $100 just this summer, with gasoline prices in the U.S. down for 102 straight days. The national average for a gallon of gas was down to $2.18, according to GasBuddy.com.

The world's major oil suppliers show no signs of cutting production anytime soon, with Saudi Arabia and others willing to sweat out smaller rivals who cannot cope with $40-$50 oil for very long.

Light Sweet Crude Oil futures for February delivery, the most actively traded contract, plummeted $2.11 or 4.2 percent to close at $47.93 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for February delivery scaled a high of $50.37 a barrel intraday and a low of $47.55.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 91.38 on Tuesday, up from its previous close of 91.37 late Monday in North American trade. The dollar scaled a high of 91.68 intraday and a low of 91.12.

The euro trended lower against the dollar at $1.1923 on Tuesday, as compared to its previous close of $1.1932 late Monday in North American trade. The euro scaled a high of $1.1971 intraday and a low of $1.1885.

In economic news, a Commerce Department report showed new orders for U.S. manufactured goods dropped by 0.7 percent in November, matching the decrease seen in October. Economists expected orders to drop by about 0.6 percent.

The Institute for Supply Management Tuesday said its non-manufacturing index dropped to 56.2 in December from 59.3 in November. Economists expected the index to show a more modest drop to 58.0.

Germany's service sector logged a moderate growth in December, final survey data from Markit Economics showed Tuesday. The seasonally adjusted services Purchasing Managers' Index remained unchanged at 52.1 in December, with the flash estimate indicating the index at 51.4. Nonetheless, the average reading for the fourth quarter was the weakest since the third quarter of 2013.

Elsewhere in Europe, the British service sector growth eased more than expected to a 19-month low in December on some weak activity and new business, a survey by Markit Economics and the Chartered Institute of Purchasing and Logistics showed Tuesday.

The seasonally adjusted Markit/ CIPS Purchasing Managers' Index showed a notable drop to 55.8 in December, the lowest since May 2013, from 58.6 in the previous month. The index was forecast to fall marginally to 58.5.

Meanwhile, the French service sector returned to growth in December, final data from Markit Economics showed Tuesday. The final services Purchasing Managers' Index rose to 50.6 in December from 47.9 in November. According to preliminary estimate, the sector contracted in December, with reading at 49.8.