Growing Crude Supplies Continue to Weigh Oil Prices Down

Despite remaining mostly steady during the early trading session on Friday, oil prices were seen to be heading into a downward direction after investors continued to raise concerns regarding the growing supply in the United States. This curbs the efforts of the Organization of Petroleum Exporting Countries as well as the participating countries in preventing a global oversupply as well as push oil prices higher.

While oil prices were mostly steady last week due to an improved market sentiment as well as announcement of the meeting between U.S. President Donald Trump and North Korean leader Kim Jong-un. While the meeting may not possibly conclude with an agreement, this prevented oil prices from slipping down below $60 per barrel.

Weak Oil Outlook

Due to investor concerns regarding the growing crude supplies, oil prices are expected to decline before the end of the week. The markets have seen both crude benchmarks loose ground during Friday’s session with investors remaining mostly concerned regarding the growing supply in the United States.

Other countries whose production has recently been growing has also concerned the markets despite the extension of the OPEC cuts until the end of the year. Crude oil prices also started this month weaker due to the same concerns.

The U.S. have been posting a rise on its weekly output for the past month. The country has recently surpassed Saudi Arabia as the second biggest producer in the world after its production reached 10 million barrels per day. 

Currently the global supply, according to the International Energy Agency stated that supply for the month of February jumped by 700,000 barrels per day to around 97.9 million barrels per day. The IEA also stated on Thursday that the increase in the crude oil supply exceeded its expectations for the demand growth of around 1.5 million barrels According to the agency, non-OPEC country production may grow by as much as 1.8 million barrels per day compared to the increase of 760,000 barrels per day last year.

Oil Prices

Brent crude futures in London traded down by 7 cents to $54.5 per barrel from having risen by 23 cents during the previous session. The benchmark has been down by 0.7% during the week. While investor outlook slightly changed during the week, reports have showed that the growing supply may exceed the growth in crude oil demand for this year.

The U.S. West Texas Intermediate oil futures for April delivery was down during the trading session on Friday. The benchmark lost as much as 0.1% or 3 cents from settling 23 cents higher during the last trading session. The WTI was also up by 1.3% last week and is now expected to post a lost of around 1.4% this week.

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