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Crude-oil prices fell hard again Friday, with the U.S. benchmark settling at its lowest level in more than five years. Oil briefly erased some losses after a stronger-than-expected U.S. jobs report, but then it slumped to trade at its lowest level since mid-2009, weighed down in part by a rallying dollar A stronger buck often hurts commodities that trade in dollars, since that makes them more expensive for holders of other currencies. “The jobs report was great, but along with that came a further strengthening of the dollar, and the oil market has generally been prioritizing the dollar strength over economic strength,” said Jim Ritterbusch, president of oil-trading advisory firm Ritterbusch & Associates. Crude also was pressured by Saudi Arabia cutting January prices for U.S. and Asian buyers.
On the New York Mercantile Exchange, crude futures for delivery in January dropped by 97 cents, or 1.5%, to settle at $65.84 a barrel, marking the lowest settlement for a front-month contract since July 29, 2009. The U.S. benchmark endured a weekly loss of 0.5% after being up for the week earlier Friday.
Meanwhile, January Brent crude on London’s ICE Futures exchange slumped 57 cents, or 0.8%, to $69.07 a barrel. This represented a 1.5% loss for the week and the lowest settlement since Oct. 7, 2009. Serving as an upbeat backdrop for oil’s collapse, data showed that the U.S. economy added 321,000 jobs in November, easily topping forecasts for 235,000 nonfarm jobs.
On Thursday, Saudi Arabian Oil Co., also known as Saudi Aramco, reduced its official selling prices for all oil grades bound for Asia in January by between $1.50 and $1.90 a barrel, compared with December. It also cut prices for all crude grades to the U.S. by between 10 cents and 90 cents a barrel. Oil markets have recently been interpreting Saudi Arabia’s monthly price adjustments as signs of the oil producer’s intent to retain market share through a price war rather than adjusting export volumes. Ritterbusch told MarketWatch he expects the U.S. oil benchmark to fall to the mid-$50s a barrel by around January, while he expects Brent to fall to around $60. He predicts OPEC, which decided not to cut production last week despite falling prices, will be “forced to cry uncle” in 2015’s first quarter.