Dip in Oil Prices after Rising US Supplies Counteract Opec Cuts
On Wednesday, oil prices dipped because of ongoing high supplies despite Opec-led production cut. However, oil prices remained in a narrow trading band which has been observed since January.
Brent crude futures were at $55.44 per barrel down by fourteen cents from their last close. On the other hand, WTI (US West Texas Intermediate) were trading at $52.74 per barrel down by seven cents.
According to traders, US crude inventories rise was the main reason behind the pressure on prices. American Petroleum Institute’s data stated that commercial US crude inventories were at 488 million barrels.
Opec (Organisation of the Petroleum Exporting Countries) is countering the swelling US supplies to put an end to global fuel supply gut as well as prop up the market. Opec has also stated that, production will be cut by 1.2 million barrels/day in 2017’s first half. Russia another producer has pledged to cut another output of 600,000 bpd.
A survey published by Reuter showed that output of Opec fell by more than one million bpd to 32.27 million bpd in January. AxiTrader chief market strategist, Greg Mckenna stated that it is a good start to lower the production and bring balance in the market. However, he also added that questions still remain regarding whether Opec will be able to achieve its goals or not.
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