Oil plunges to the lowest since July, boosting disinflation hopes

<p>Oil is on track for its fourth consecutive weekly loss and has plunged today to the lowest since July. WTI crude oil is down $3.60 to $73.11, a drop of 4.2%</p><p>It's the lowest since July 11 as the market trades on a surprising amount of supply, despite OPEC removing around 3 million barrels per day. Coming into the quarter, analysts were looking for inventory draws of around 2 million barrels per day but that's turned out to be more like 200k bpd as OPEC countries have increased exports.</p><p>Officials at OPEC say that's a seasonal pattern and not a sign of quota cheating but it's led to a rout in oil prices. Now OPEC will have to decide on whether to continue to curb production or to go after market share.</p><p>We could very soon be talking about oil in the $60s.</p><p>Importantly, the rest of the market is trading off signals from oil. The drop in prices is disinflationary and that should bring the Fed closer to its 2% inflation target. Moreover, it's helping yields fall across the board with US 10s down 10 bps to 4.43%.</p>

This article was written by Adam Button at www.forexlive.com.