Oil Trades Flat at $45.14/barrel

Crude Oil
Illustration of three oil rigs in the desert

Oil prices on Friday, June 23, hovered near a 10-month low in U.S. Prices hit earlier this week, and remained on course for its biggest first-half decline in almost two decades as production cuts have failed to reduce oversupply.

Brent crude futures were down 8 cents at $45.14 a barrel at 1337 GMT. U.S. West Texas Intermediate (WTI) crude futures traded at $42.64 a barrel, down 10 cents.

Oil prices have fallen about 20 percent this year despite an effort led by the Organization of the Petroleum Exporting Countries to cut production by 1.8 million barrels per day (bpd).

That puts the market on course for its biggest first-half percentage fall since the late 1990s, when rising output and the Asian financial crisis led to sharp losses.

Others disagree and see oil returning to $50 a barrel on some of the more bullish signals in the market.

Frank Schallenberger, head of commodity research at LBBW in Stuttgart, said he expects prices to rise by the end of the year on higher demand as well as OPEC and non-OPEC production cuts.

Tamas Varga, senior analyst at London brokerage PVM Oil Associates, pointed to falling crude inventories in the United States as a fundamental factor that could support prices.

Earlier this week, the U.S. Energy Information Administration said crude inventories declined by 2.7 million barrels last week, exceeding analyst expectations for a 2.1-million-barrel drop.

At the heart of the glut is that efforts to reduce production by OPEC suppliers, as well as Russia, have been met by soaring output from the United States and OPEC members Libya and Nigeria, which are exempt from the cuts.

Thanks to shale drillers, U.S. oil production has risen more than 10 percent in the past year to 9.35 million bpd, close to the level of top exporter Saudi Arabia, Reuters reports.

 

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