Oil prices 6-year low
Oil prices 6-year low, Oil prices fell to six-year lows on Monday in the face of concerns that a glut in the United States was outpacing already-brimming storage facilities.
Additionally, the Organization of the Petroleum Exporting Countries published a report suggesting that the cartel remained reluctant to intervene to prop up prices.
The direction of oil prices, which had risen sharply from January lows, has fallen back in recent days. Traders are now focused on the second quarter of the year, when demand for oil is traditionally weak because of the end of winter and scheduled refinery shutdowns for maintenance.
On Monday, the price of West Texas Intermediate crude, the main United States benchmark, fell about 2 percent to about $44 a barrel, a six-year low, while Brent crude, the international benchmark, fell by about 2 percent to about $53 a barrel.
Oil markets continue to focus on OPEC because its members could quickly alter the markets’ balance by cutting production. But while some members, including Nigeria and Venezuela, would like to see cuts, Saudi Arabia and its Gulf allies show little inclination to change the policy they agreed to in the fall: Protect market share regardless of what happens to prices.While OPEC’s competence at managing the market was always much in question, the organization’s decision to stay on the sidelines has opened the way for volatile price movements.
In the view of market participants, OPEC’s role as the swing producer has moved to the United States and, in particular, to the producers of oil from shale rock. These companies have helped increase American production by more than four million barrels a day since 2009, far more than the combined increases in the rest of the world.
Many analysts say that with low prices discouraging investment in drilling, production growth in the United States will level off and even begin to decline. But when this change will happen is a matter of speculation.
Additionally, the Organization of the Petroleum Exporting Countries published a report suggesting that the cartel remained reluctant to intervene to prop up prices.
The direction of oil prices, which had risen sharply from January lows, has fallen back in recent days. Traders are now focused on the second quarter of the year, when demand for oil is traditionally weak because of the end of winter and scheduled refinery shutdowns for maintenance.
On Monday, the price of West Texas Intermediate crude, the main United States benchmark, fell about 2 percent to about $44 a barrel, a six-year low, while Brent crude, the international benchmark, fell by about 2 percent to about $53 a barrel.
Oil markets continue to focus on OPEC because its members could quickly alter the markets’ balance by cutting production. But while some members, including Nigeria and Venezuela, would like to see cuts, Saudi Arabia and its Gulf allies show little inclination to change the policy they agreed to in the fall: Protect market share regardless of what happens to prices.While OPEC’s competence at managing the market was always much in question, the organization’s decision to stay on the sidelines has opened the way for volatile price movements.
In the view of market participants, OPEC’s role as the swing producer has moved to the United States and, in particular, to the producers of oil from shale rock. These companies have helped increase American production by more than four million barrels a day since 2009, far more than the combined increases in the rest of the world.
Many analysts say that with low prices discouraging investment in drilling, production growth in the United States will level off and even begin to decline. But when this change will happen is a matter of speculation.