Thursday saw oil prices slip as global oversupply and US crude stocks soar. Brent crude fell 50 cents a barrel at $55,86 with US light crude slipping by 50 cents to $53.33. US West Texas Intermediate traded at $52.79 a barrel.
US Inventories
The US crude inventories rose by 1.5 million barrels to 520.2 million barrels according to official data. Analysts believe that US crude could drop to the $53.21 a barrel level.
OPEC & Russia
In just 9 months US drilling rigs has risen to 602, or 91 percent, with production of 550,000 barrels a day, rising to a total of 9 million barrels. According to one analyst North American oil companies intend to increase their spending by 25 percent in 2017 compared to last year. With the rise in US production, there are concerns that there will be a showdown with OPEC who since their meeting in November, pledged to drop oil output. So far OPEC have complied to their pledge. Russia’s oil output since January is at 11.11 million barrels per day.
CEO of Royal Dutch Shell, Ben van Beurden said in an interview that because of the difficulties that US oil companies went through, the shale business is rejuvenated. Since 2015 over 100 drillers went bankrupt, the survivors are now jumping on the band wagon on the lower prices.
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