Oil prices slide 3% on concerns with oversupply
As of 8.35am GMT, oil prices continued their price fall with Brent lower at US$70.08 and US crude oil at US$61.37.
Oil futures slid on Thursday, with United States (US) crude oil falling by almost 3% as observers fear that US inventories will continue to rise while increased sanctions on Iran had a more muted immediate impact than previously expected.
Brent crude oil futures ended the day’s session lower by US$1.43 per barrel, or 2% to US$70.75 while US West Texas Intermediate crude futures settled 2.8% or US$1.79 per barrel lower, to US$61.81.
As of 8.35am GMT, oil prices continued their price fall with Brent lower at US$70.08 and US crude oil at US$61.37.
Last week, crude production in the US rose to a record high of 12.3 million barrels per day. Stockpiles were at their highest since September 2017, jumping by 9.9 million barrels to 470.6 million barrels, government data showed.
US refineries are due for maintenance this spring, and some observers are concerned that the demand for crude oil will be soft, causing stockpiles to rise further.
According to the International Energy Agency (IEA), the biggest new source of oil supply comes from the US, as total oil supplies from the country is expected to grow by 1.6 million barrels per day for this year.
The recent US tightening of sanctions on Iran had led to a more muted immediate impact, causing market sentiment to turn bearish. The roll-back on waivers to buyers of Iranian oil – countries including China, India, Italy, and Greece - had not led to a shortage in supply, said experts.
Supply cuts from the Organization of the Petroleum Exporting Countries (Opec), which has driven crude prices to rise by over 30% this year, may not be sustainable if other producers take action in increasing their output. Russia, for example, has been sending signals on potentially increasing its output.
Oman energy minister Mohammed bin Hamad al-Rumhy said recently that Opec was intending to extend its supply cuts at its meeting in June.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Speculate on commodities
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
Live prices on most popular markets
- Forex
- Shares
- Indices
