The price for oil dropped on Monday, following a constant expansionistic endeavor by the U.S. in terms of drilling for oil. The oil production has kept a high level of oil stockpiles available globally, despite the OPEC taking steps to reduce their oil production in order to secure the market.
Demand for Oil Loosens
The overall demand for oil has been reducing on a global scale, prompting a meager financial sentiment. The price for oil is dropping to rates that are now on a relative equal ground with the rates that were announced last year, after the output cuts were first announced. LCOc1 on Brent crude futures had fallen 18 cents, a total of a 0.4% reduction, putting the oil price at 0659 GMT to US$47.19 per barrel. Meanwhile, CLc1 experienced a fall of 0.5%, or 20 cents, landing down at US$44.54 per barrel, in U.S. West Texas Intermediate crude futures.
U.S. Oil Production Blamed for Oil Slump
The above benchmarks have fallen by nearly 14% since the end of May, 2017, after the producers’ pledge of reducing their production of oil by 1.8 mn barrels per day was extended by nine more months. The extension is to stretch till Q1 2018, and is led by the OPEC. The traders are stating that the constant oil production in the U.S. is undermining the OPEC efforts to stabilize the market.
Goldman Sachs stated on Friday, that the U.S. oil production was raised by 6 in the last week. The oil production has continued for 22 straight weeks in which new rigs were added to the list.