And now for a little good news: oil prices fell to a seven-month low, on Tuesday, on the heels of an announcement of higher supply from several important oil producers. This is a trend that has—and will continue to—undermine[d] attempts by OPEC and other oil producers to support the market by reducing output.
More specifically, the benchmark of Brent fell by $1.06, to reach the low of $45.85 per barrel. This is the Brent benchmark’s lowest value since mid-November of last ye
The market is turning lower in part on tanker-tracking data showing unsold crude oil cargoes from Nigeria, he said. U.S. production is also a concern because Amar. This is before OPEC and other producers had reached the agreement to reduce output by at least 1.8 million barrels per day for the six months after January.
Referencing the downturn, Morgan Stanley analysts comment in a recent note: “Recent data points are not encouraging. Identifiable oil inventories – both crude and product in the OECD, China and selected other non-OECD countries – increased at a rate of (about) 1 (million bpd) in Q1.”
Now OPEC supplies had originally soared in May, with output finally on the upswing again in both Nigeria and Libya; which happen to be two countries exempt from the international reduction.”
It certainly does not help the global glut that US oil production has been on a full upswing, of late. As a matter of fact, data from the end of last week shows that US oil production is actually in its 22nd consecutive week of US oil drilling rig increases.
As such, analysts expect that Nigeria’s Bonny Light crude bench mark should reach 226,000 barrels per day, in August. This is roughly 50 percent more than then 164,000 barrels the producer moved in July.
“The increasing August export program in Nigeria and the jump in Libyan oil output should pressure oil prices further in the short term,” said Tamas Varga, who is a senior analyst with the London brokerage PVM Oil Associates. He continues, “If we get bearish U.S. Oil statistics this week, we could see a test of $45 on Brent.”
He also adds: “Not only do we have a struggle with production and an ineffectual OPEC, non-OPEC production regime, but you have this overhang again that is not clearing, and so that is what this market is reacting to,” he said.