A surge in equity markets was able to support crude oil prices to trade slightly on the high side on Thursday but concerns over an oversupply has placed a lot of pressure on the precious commodity’s price. Brent crude futures were up by $0.36 at $65.25 per barrel while U.S. West Texas Intermediate crude futures are also up by $0.33 at $61.26 per barrel as of 8:15 AM EDT
Will there be another oversupply crisis?
The latest data revealed that worldwide demand for the black gold may continue to rise for the rest of 2018. While this is good news for the market, Q1 2018 reports also showed that there has also been an increase in inventories and traders are worried of another oversupply which could put more pressure on the price of crude oil. With the commodity moving sensitively based on the performance of the stock markets, analysts are expecting the demand for petroleum to increase by 1.8 million barrels per day.
Back in January 2017, the Organization of the Petroleum Exporting Countries (OPEC) and other oil producing countries such as Russia has reached an agreement to slash output in a unified effort to clear the surplus in inventories which have caused prices to drop from over $100 a barrel to just around $50 a barrel.
New flood of US oil
The latest figures from the OPEC and IEA (International Energy Agency) for the month of January indicate that there has been indeed a slight increase in global inventory. On the other hand, US crude production continues to rise hitting a record of 10.38 million barrels per day. This is 23 percent higher than their inventory back in the middle of 2016. Such increase negates the OPEC’s efforts to drive oil prices to go up since the US is poised to take the title of the largest producer in the world this year.