Oil prices up but stay near multi-year lows

Brent crude added 30 cents to $41.03 per barrel in London after plunging $2.27 the previous session to close at $40.73. West Texas Intermediate, the USA benchmark, will trade for $48 in the period, according to forecasters, compared with $37.88 Tuesday on the New York Mercantile Exchange.

Total oil production in the world exceeds global oil demand by around 2.5 to 3 million barrels per day at the moment.

Brent costed less than $40 per barrel again yesterday for the first time since February 2009 but recovered upto 40.46, WTI has been lingering with bearish favorite figure at 37.75 ahead of inventory data.

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Crude oil futures plummeted to their lowest price in almost seven years on Monday after OPEC failed to slow its pumping into a supply glut, and a stronger dollar made it more expensive to hold crude positions.

“In June of past year, the list price for petrol was 13.28 per litre, where today it is 10.80”.

Global stock markets fell sharply Tuesday as oil prices remained near six-and-a-half year lows following last week’s decision by the OPEC oil cartel to leave production unchanged.

If prices of oil continue to decline a number of infrastructure projects may be affected, also all government expenditure which rely on oil revenue for funding may be cut to suit the times. Helping to pressure the market was an uptick in the U.S. Dollar and early weakness in the crude oil market.

As recently as late November, US crude for December 2022 delivery and onward was trading slightly above $60 per barrel, but following the OPEC meeting, contracts out to December 2024 are below $60, trading data shows. “In particular, the apparent disagreement between Saudi Arabia and Iran raised the spectre of further gains in Saudi oil output if Iran’s exports are raised more than expected”, said ANZ Research in a report.

Consumers might be celebrating the holidays early this year, as oil prices plummeted on Monday, falling to their lowest point in nearly 7 years.

Worries of an oversupply immediately affected the price of oil, sending US crude under $40 a barrel, while simultaneously knocking down the stock prices of USA energy companies.

Sonia: There is this ballooning glut between half a million to two million barrels a day of crude, much higher demand, do you think that situation could get worse in the near-term, what are you factoring in?