Crude Oil Ends Below $56 On Continued Oversupply Concerns

(RTTNews) - U.S. crude oil plunged to end sharply lower Monday, after having gained over 5 percent in the last session, on continued concerns of a supply glut and demand growth worries.

Saudi Oil Minister Ali Al-Naimi is reported to have said the OPEC will not reduce production even if non-OPEC producers decide to cut output. He even hinted that his country may increase production if any new buyers come into the picture.

Meanwhile, blaming non-OPEC producers for the fall in crude oil prices, the U.A.E. Energy Minister Suhail Al Mazrouei said on Sunday that non-OPEC producers should cut output.

Investors also await the weekly crude oil report from the American Petroleum Institute due late Tuesday, and the official weekly oil report from the U.S. Energy Information Administration scheduled for release early Wednesday.

Light Sweet Crude Oil futures for February delivery, the most actively traded contract, plummeted $1.87 or 3.3 percent to close at $55.26 a barrel on the New York Mercantile Exchange Monday.

Crude prices for February delivery scaled a high of $58.53 a barrel intraday and a low of $55.13.

On Friday, crude oil futures ended at $57.13 a barrel, up $2.77 or 5.1 percent, bouncing back strongly after losing over 4 percent a session earlier. Wednesday's data from Energy Information Administration that showed a less than expected decline in crude stockpiles in the week ended December 12th contributed to oil's recovery.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 89.58 on Monday, down from its previous close of 89.63 late Friday in North American trade. The dollar scaled a high of 89.64 intraday and a low of 89.37.

The euro trended higher against the dollar at $1.2249 on Monday, as compared to its previous close of $1.2229 late Friday in North American trade. The euro scaled a high of $1.2276 intraday and a low of $1.2223.

In economic news from the U.S., a report from the National Association of Realtors showed existing home sales to have pulled back much more than expected in the month of November, declining 6.1 percent to a seasonally adjusted annual rate of 4.93 million, after climbing 1.4 percent to 5.25 million in October. Economists expected existing home sales to edge down to 5.20 million.

Germany's real wage index rose for the third consecutive quarter, at the fastest pace in more than three years, during the three months to September, figures from Destatis showed Monday.

Real wages climbed 1.8 percent year-on-year in the third quarter, faster than the 1.5 percent rise in the previous three months. The rate of growth was the highest since the second quarter of 2011 when it increased 1.9 percent.

Elsewhere, China unveiled rules to ease market access for foreign banks in order to open up the domestic financial sector. The State Council amended its rules requiring foreign banks to transfer a specific amount of operating funds to its new branch in China. Foreign banks will also be allowed to conduct yuan transactions after operating in China for at least a year compared to the prior requirement of three years.

Meanwhile, the Bank of Japan turned more upbeat on the economy, the Monthly Report on Recent Economic and Financial Developments revealed Monday. Japan's economy has continued to recover moderately as the decline in demand following the sales tax hike have been waning on the whole.

Traders will be looking ahead to third quarter GDP report, durable goods orders data for November, the consumer confidence report from University of Michigan, new home sales report for November and weekly jobless claims report this week.

Besides weekly oil reports from the American Petroleum Institute and the Energy Information Administrations, markets will be looking ahead to third quarter GDP report, durable goods orders data for November, the consumer confidence report from University of Michigan, new home sales report for November and weekly jobless claims report this week.