Dropping oil prices may show at pump

While violence in the Middle East tends to push up oil prices, the attacks in Paris also raised concerns over France’s (and the EU’s) economy, which can have a depressing effect on oil prices.

This view is misguided.

According to analysts, the crude inventory is expected to rise by 1.9 million barrels during the In the week ended 13 November.

Adding to the supply glut woes was a statement Tuesday by Iranian Oil Minister Bijan Zanganeh that Tehran will not negotiate with OPEC over its planned 500,000 barrels per day (bpd) production hike once western sanctions are lifted.

The planet’s “mega glut” of oil is showing no signs of drying up, meaning that the global price of energy is set to remain depressed well into next year, the worldwide Energy Agency said yesterday.

An Opec delegate from a Persian Gulf producing country said he believed that in the mid-term oil prices could get a few support due to rising tensions especially if the worldwide community takes more steps to reduce smuggling of oil and hits oil facilities under Islamic State’s control in Syria and Iraq.

Benchmark United States crude futures slipped to a two-week low at $43,55 a barrel and were trading down over half a dollar from their last close at $43,68.

Earlier this week the US Energy Information Administration reported that American crude inventories rose by 4.2 million barrels, well outstripping analysts’ expectations – and boosting stockpiles to levels not seen at this time of year for 80 years.

Analysts have said the excess supplies on global markets that have depressed crude prices for more than a year are likely to stretch well into 2016.

The latest monthly report from the IEA said that stockpiles now stand at a record three billion barrels.

Spot gold prices rose over 1.2 percent to $1,096.72 an ounce by 1:45 a.m. EST, and US gold futures also rose more than 1 percent. The uprising in Libya in 2011, in a glaring example, caused oil prices to shoot up.

Oil is witnessing its worst patch since the financial crisis; the price has dropped by almost 60% since June 2014 as high inventories and production have collided with the downturn in Asia, particularly in Japan and China.

“We have a situation where global inventories are incredibly high and even though the rigs are coming down, USA production maintained its levels from last week”, said Dragosits.