Crude Prices Continue To Hit the Low Range Due To Oversupply Issues
By Daisy Joseph
The OPEC deal agreed upon by major oil producing countries hasn’t helped the oil prices to get better. The increase in US Shale oil production continues to result in surplus, diminishing the oil prices globally. On Monday, the West Texas crude oil hasn’t changed much after experiencing a steep loss in the previous week. The WTI crude futures were priced at $48.38, falling well below the $50 supporting point. Bent crude was trading at $51.36. There were no releases on Monday and as a result, oil trading was quiet. The markets were set to experience a gain of a meager 0.1%, while the oil price continues to hover in the 14-week low price point.
The WTI Crude futures were in for a shock, when it lost 8.7%. Since November 30th, the oil price was above the $50 mark and it was providing extensive support for the commodity. The investors were worried because oil prices are expected to increase in this year as the OPEC deal is adhered to by major oil producers.
The decline in oil price is mainly due to the increase in US inventories. Last week, the inventory increased to 8.2 million barrels, while the expectations were 1.1 million barrels. The crude oil inventory has been rising continuously in the past 11 weeks, which is not supporting the oil prices. Despite the compliance agreement of 94% by the OPEC members, the crude oil prices remain low, while the forecast was $60 per barrel in 2017.
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