Friday, 22 June, 2018

WTI crude drops under supply pressure, but Brent ticks higher

Oil prices fall as supply from top three producers set to rise Fuel prices might dip after 14 consecutive days of price hike
Kenneth Drake | 30 May, 2018, 18:38

US West Texas Intermediate (WTI) crude fell US$1.39 to US$66.49 a barrel.

Rising U.S. crude production also weighed on the market. "Even with increases in OPEC production, Europe still needs more light crude to stay supported". "Whether it is a million barrels [or] more or less, we think we'll have to wait until June before making that announcement", he added.

The 1.8 million barrels a day that they've taken off the market is nearly entirely compensated for by the 1.53 million barrels a day of additional unconventional crude production from the USA, not to mention 640,000 of additional daily barrels that have come out of Canada.

Monday May 28 saw another price tumble for oil prices, after crashing down last Friday.

Raising production would ease 17 months of strict supply curbs amid concerns that a price rally has gone too far, with oil having hit its highest since late 2014 at $80.50 a barrel this month. That “is a surprising divergence, as Brent is more exposed than WTI to higher production in Russian Federation and Saudi Arabia, ” said Michael McCarthy, chief market strategist at CMC Markets. What's going on in the global oil market to trigger this decline, which is welcomed the world over by energy consumers?

The majority of oil prices drop in the market after having enormous pressure from the rising supply concerns.


Since previous year, oil producing countries have cut back production in an attempt to offset dipping prices, withholding as much as 1.8 million barrels per day.

"Market participants remain unsure how quickly an exit strategy can be implemented and whether it will go beyond just balancing the output drop from Venezuela", said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London.

West Texas Intermediate crude oil fell significantly during the trading session on Friday, as the United States dollar continues to strengthen, and of course there is talk now that perhaps the production cuts coming out of OPEC's recent meetings may be coming to an end.

Another player in on the global oil stage is Venezuela.

The rapid decline in oil inventories and worries about supplies after the US decision to withdraw from the worldwide nuclear deal with Iran, as well as Venezuela's collapsing output, were behind the change in OPEC's thinking.

Saudi Arabia has 22 per cent of the world's petroleum reserves and is the world's largest exporter. In addition, US oil production is ramping up quite steadily. US production broke 10 million bpd for the first time in 48 years in November. Baker Hughes reported an oil rig count increase of 15 last week.

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