Saturated Oil Market Pushes The Price Down
Oil price recovered slightly in the beginning of the last week. However, by the end of the week, oil price fell sharply due to the uncertainty in the market. On Monday trading, the oil prices went down further extending the losses of the last weekend. The reduction in oil price is mainly due to the increase in the drilling activity in the USA. The OPEC and non-OPEC members have also been adding to the oil stockpiles globally.
OPEC has indicated that production caps may be extended to Libya and Nigeria as well. Several years of unrest in the past has reduced the production in these countries. However, the output from these countries has begun increasing, which has worried OPEC. In order to reduce the supply in the market, OPEC is keen on ensuring a cap on oil production.
The Brent crude futures were trading at $46.21, losing as much as 1% compared to the previous session. US Crude futures were trading at $43.78 per barrel which has also lost 45 cents. Market watchers have warned that the market is in deep trouble as the supply continues to increase.
OPEC has already persuaded its members to cut down production until March of 2018. However, the global glut remains unaffected until now. Prominent OPEC ministers have scheduled a meeting with Russia which is a non-OPEC member to cut down its production.
The global oil producers have complied with OPEC, but the Brent futures were trading at 17% lower compared to the price in the beginning of 2017.