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Oil Edges Forward Expecting Gloomy Market Conditions

June 29, 2017
by Latisha Liming
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The inventory data released last week showed a greater than expected decline in the oil stockpile. As a direct result of this favorable market condition, oil prices rose steadily for the third session in a row on Monday. Earlier, the inventory dropped to a seven-month low level despite the increase in the US oil production. This has renewed hope among the investors as the oil market shows movements towards increased demand. The US oil production, however, continues to threaten the supply-demand balance as the global inventories could not reduce beyond a certain limit.

Brent crude futures gained 48 cents and were trading at $46.02 per barrel. Despite the slight increase, the oil price is heading for a 20% decline for the first half of this year. Previously, these were trading at $44.35 in November. WTI crude futures also gained 47 cents trading at $43.48 per barrel.

Many US oil rigs have reached their peak production in three years, adding to the oil stockpile. The US crude futures have gained the interest of the investors when the oil inventories have a greater drawback. The US Shale oil output increased by 10% compared to the last year production. Additionally, oil rigs in countries such as Brazil are also continuously pumping more oil.

The increased production from these countries is exerting more pressure on the OPEC deal. The OPEC members have agreed to cut down production in order to increase demand for oil. According to market experts, the market doesn’t need even one additional rig for the next year if the balance is to be attained in 2018.