Oil Prices Drop by 2 Percent


Published Date : Sep 22, 2015

Prices of crude oil dropped by as much as 2 per cent on Tuesday amid concerns over the fact whether the overall demand will be sufficient to address sky rocketing surplus. This came before the weekly survey on the inventory levels in the United States.

Price volatility has increased this week owing to the fact that the crude outlook has been rendered unclear by information that indicates that after losing out on over half its value during the duration of a year, the market could possibly have been rendered stable. This could also be due to the constant spike in global surplus in recent times.

There has been proof that shale production in the United States is beginning to experience the impact of oil prices that are at a low of nearly six years. This has led to the issuance of more bullish predictions by the International Energy Agency toward the balance of the market next year. 

Thomas Pew, analyst at Capital Economics said that just in the past few months , there has been a reported loss of around half a million barrels of oil in terms of production in the US on a daily basis.

However, there have been many uncertainties surrounding the outlook of the demand from leading consumers like China. The pliability of the United States economy after last week’s policy meeting of the Federal Reserve has also added to the uncertainty.

Pew said that nothing at the moment is absolutely certain. And in fact that is the only thing that is certain at this moment. However, be that as it may, it does seem that the dropping prices of crude oil are beginning to have an impact on the production in the US. Adding that the forecast by Capital Economics indicated at a slow increase of oil prices in the next few years, Pew said that all eyes are focused on whether the low prices are going to continue their streak.