Today we are observing a decrease in the price of crude oil. Despite OPEC’s best efforts to keep supply limited in order to boost oil prices, continuously rising oil reserves in the United States indicate that the market is once again approaching a state of oversupply, which will drive prices down.
As of Friday morning, the price of the Brent crude reached $70.49, while the WTI traded around $61.61.
According to the most recent reports on oil supplies, last week the United States produced 12.3 million barrels per day, a new record high for the US. The North-American country is rich in oil reserves and relies primarily on shale oil, which is a cheaper extraction method that allows the US to continue unperturbed even when oil prices become very low.
In addition, supply also increased as Russia was able to resume the supply of clean oil to Europe, after a brief pause due to contamination.
It is expected that supply will continue to grow in the United States, as will exports. Despite the sanctions against Iran and Venezuela, as well as OPEC’s efforts to keep production levels low, in the long term oil will likely become cheaper.
