Published Date : Dec 03, 2015
The claims that the prices of oil in the global market had reached a stable level were vindicated yesterday when right ahead of the meeting of OPEC, the prices reached rock bottom again, to a level that’s the lowest in nearly the past seven years.
Brent crude oil plummeted on Wednesday ahead of the OPEC meeting to be held later this week at which it is projected that the association will hold on to its policy of high oil production and amid the recent evidence of the consequent glut in global oil supply.
The US energy watchdog has reported that its reserves have increased for the tenth straight week, at a time when the stockpiles of domestic oil are at an 80 year high and tankers full of oil are queuing up at delivery ports.
It has also been reported that the output of oil in the U.S. increased slightly to 9.2 million barrels, contradicting claims that the heavily low prices would lead to a reduction in the country’s shale production.
Prices of Brent oil reduced a further 4.4% and valued around US$42.50 per barrel on Wednesday in London, the lowest price since March 2009. They rose to about US$43 the next day. The prices of West Texas Intermediate, the U.S. benchmark, also tumbled by 4.6% and went down to lower than US$40 on Wednesday, only marginally higher than the multi-year low recorded in August.
The OPEC meeting to be held in Vienna on Friday is expected to bring some move that will make the oil prices stable. Some market experts hope that Saudi Arabia, under lobbying from other oil producing members, will reduce its oil supply so as to support the falling prices. However, some think that the country wouldn’t do so as it is distrustful that other non-OPEC countries will not follow suit.