OPEC global oil Glut fix remains as one of the key worries for the oil market. Given the rising US oil supplies, crude prices drop drastically. What is next for the black gold?
15 June, AtoZForex – Crude oil prices have dropped to the lowest level since November when global oil producers have agreed to cut the oil output in the attempt to revive the oil market. The oil nations being lead by the Organization of the Petroleum Exporting Countries (OPEC) have decided to limit their oil production. However, the oil bloc and other countries, including Russia did not manage to meet their goals, while global markets have appeared to give up.
Markets lost hope on OPEC global oil Glut fix?
Presently, the overall global oil market sentiment is somewhat negative, where the oil traders doubt the ability of OPEC to boost the oil prices. The oil glut appears to be still in place, with oil prices dropping below $45 a barrel on Wednesday in New York. Such shift in oil prices followed the oil stockpiles report from the US Energy Department. The agency has reported the significant increase in the petroleum supplies from the US along with climb in gasoline stocks.
The gains appeared as a surprise since the markets were expecting the complete opposite. Prior to the release, markets anticipated a decline in the US stockpiles due to the peak of the summer driving season. Crude prices dropped almost 4 percent, hitting $44.73 a barrel. Now, the oil trades at $44.46 a barrel.
OPEC oil production spike
The US production is set to reach 10 million barrels a day in 2018. Moreover, according to the new data released by OPEC, the oil output from the bloc has risen by 336,000 barrels a day during last month. This marked the biggest increase since December. Such spike is mostly based on the recovering production from Nigeria and Libya.
The dropping US oil demand is adding to the oil markets’ concerns. The consumption of gasoline has fallen 1 percent from a year ago. However, the gasoline inventories have climbed by 2.1 million barrels. The overall US petroleum inventories climbed 6.8 million barrels. This includes gains in crude, fuels and other refineries.
The global oil analysts and energy companies are concerned about the dropping gasoline demand. They believe that something bigger might be behind the slip. Notably, after the Great Recession, the number of miles that US citizens drive each year has continued to drop.
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