The Potential for a Slowdown in the World Economy Depressed Oil Prices
Lensa Aktual. Crude prices slumped in Thursday's trade, US time. Weakening occurs as market participants' attention is focused on signaling a slowdown in global economic growth and rising crude oil production.
Reported by Reuters on Friday, the price of Brent crude oil futures fell 4.24 percent or US $ 2.31 to US $ 52.16 per barrel. The decline also occurred in the price of US West Texas Intermediate (WTI) crude oil futures of US $ 1.16 or 3.48 percent to US $ 44.61 per barrel.
"The market has partially recovered yesterday's gains brought along with euphoria on the stock market," said Lipow Oil Associates President Andrew Lipow in Houston, USA.
For the record, world crude oil prices jumped more than eight percent in Wednesday's trade. That happened as a surge in the Wall Street market after Donald Trump's administration tried to hoist market confidence.
The price of Brent and WTI has fallen more than 30 percent since the beginning of October 2018. Looking at price developments to date, the two benchmark prices are expected to decline by more than 20 percent so far this year.
Concerns about a slowdown in economic growth have weighed on investor demand for riskier asset classes and pressured crude oil futures prices. In addition, market participants are also concerned about the flood of crude oil supplies.
In the US, the American Petroleum Institute (API) recorded US crude oil inventories rose by 6.9 million barrels to 448.2 million barrels in the week ended December 21, 2018. The increase exceeded expectations of some analysts who estimated a decline of 2.9 million barrel.
Three months ago, the global oil market seemed to be in short supply during the winter in the northern hemisphere, given the US imposed sanctions on Iranian oil exports. However, other oil exporters are able to compensate for any lack of supply.
The Organization of Petroleum Exporting Countries (OPEC) along with its allies, including Russia, agreed on a month-long policy to cut production by 1.2 million barrels per day (bpd), equivalent to 1 percent of global consumption.
Nevertheless, new production cuts will take effect from January 2019. Meanwhile, oil production has recorded the highest record in Russia, Saudi Arabia and the US. The three are the largest oil producers in the world with each producing more than 11.6 million bpd.
Russian Energy Minister Alexander Novak said Russia would cut oil production by three to five million tons in the first half of 2019. However, overall oil production next year will reach 556 million tons or 11.12 million bpd, equivalent to 2018 production .
Meanwhile, even though the US has limited Iranian oil sales, the Iranian government says private exporters have no problems selling their oil.
Reported by Reuters on Friday, the price of Brent crude oil futures fell 4.24 percent or US $ 2.31 to US $ 52.16 per barrel. The decline also occurred in the price of US West Texas Intermediate (WTI) crude oil futures of US $ 1.16 or 3.48 percent to US $ 44.61 per barrel.
"The market has partially recovered yesterday's gains brought along with euphoria on the stock market," said Lipow Oil Associates President Andrew Lipow in Houston, USA.
For the record, world crude oil prices jumped more than eight percent in Wednesday's trade. That happened as a surge in the Wall Street market after Donald Trump's administration tried to hoist market confidence.
The price of Brent and WTI has fallen more than 30 percent since the beginning of October 2018. Looking at price developments to date, the two benchmark prices are expected to decline by more than 20 percent so far this year.
Concerns about a slowdown in economic growth have weighed on investor demand for riskier asset classes and pressured crude oil futures prices. In addition, market participants are also concerned about the flood of crude oil supplies.
In the US, the American Petroleum Institute (API) recorded US crude oil inventories rose by 6.9 million barrels to 448.2 million barrels in the week ended December 21, 2018. The increase exceeded expectations of some analysts who estimated a decline of 2.9 million barrel.
Three months ago, the global oil market seemed to be in short supply during the winter in the northern hemisphere, given the US imposed sanctions on Iranian oil exports. However, other oil exporters are able to compensate for any lack of supply.
The Organization of Petroleum Exporting Countries (OPEC) along with its allies, including Russia, agreed on a month-long policy to cut production by 1.2 million barrels per day (bpd), equivalent to 1 percent of global consumption.
Nevertheless, new production cuts will take effect from January 2019. Meanwhile, oil production has recorded the highest record in Russia, Saudi Arabia and the US. The three are the largest oil producers in the world with each producing more than 11.6 million bpd.
Russian Energy Minister Alexander Novak said Russia would cut oil production by three to five million tons in the first half of 2019. However, overall oil production next year will reach 556 million tons or 11.12 million bpd, equivalent to 2018 production .
Meanwhile, even though the US has limited Iranian oil sales, the Iranian government says private exporters have no problems selling their oil.
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