Oil Prices Barrel Down Further on Buildup in Global Crude

Crude oil prices were seen down to a two-month low during the most recent trading session following an announcement from the Organization of Petroleum Exporting Countries of their plans to raise crude oil supplies. The organization together with non-OPEC countries such as Russia and Kazakhstan made an agreement last 2016 to cut their production by as much as 1.8 million barrels per day altogether to help boost oil prices and prevent a global oversupply.

Brent crude oil prices traded down by 0.39% recently to settle at 475 per barrel while the U.S. West Texas Intermediate traded at $65.32 per barrel during the Tuesday's trading session. During the same trading session, it recorded a two-month low of $64.22 per barrel.

Rise in Production Output

Top crude oil producing countries such as the United States, Russia, and Saudi Arabia announced last week that they are planning to increase output as a response to the recent market conditions including the sudden rise in crude oil prices. This sent oil prices to trade lower below its previous price of $80 per barrel. 

Oil prices rallied to their highest since November 2014, last month when U.S. President Donald Trump announced that the United States, will indeed, withdraw from a nuclear deal with Iran. This would bring back heavy sanctions on the country and affect their crude production. This caused conclusion from the markets regarding a lower global supply.

While the OPEC, along with Russia, have exerted efforts in preventing a global oversupply as well as raising oil prices higher, the sudden rally of most crude prices to as much as $80 per barrel and the threats to the global supply have caused a number of producers to announce a rise in their production to ease current market concerns.

Reports have recently revealed that oil producing countries such as Russia and Saudi Arabia have recently discussed and considered raising the production of OPEC and non-OPEC producers by as much as 1 million barrels per day to help ease the market. This Friday, energy minister coming from Riyadh and Moscow are set to meet in preparations for the easing of output cuts. Khalid al-Falih from Saudi Arabia stated that any move decided would not be as aggressive to avoid further market concerns.

Trump also stated in a Twitter post last month that oil prices had been artificially boosted by the OPEC. OPEC’s Secretary General Mohammed Barkindo stated that Khalid Al-Falih stated the need for the organization to respond as they pride themselves as friends of the United States.

On the other hand, the U.S. Treasury Secretary Steven Mnuchin announced last month that the administration had a number of conversations with various groups regarding increasing their supply to soften the blow of sanctions being imposed by the U.S. against the Iran as a result of the country pulling out of nuclear deals.

Read also:  U.S. Sanctions Against Iran Push Oil Prices Above $70

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