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Crude oil edged down in a subdued trading on Monday as investors are still digesting expansion of the US crude oil production.
Benchmark Brent crude futures fell to $55.66 from its last-week high of $56.65. US West Texas intermediate crude futures were down to $52.95 after rising to $53.75 last week.
Baker Hughes officials said on Thursday that drillers added 11 oil rigs in the week of April 13. According to the recent information of the Energy Information Administration, the US crude oil production has grown to 9.4 million barrels per day, making the US the third largest producer after Saudi Arabia and Russia. Cost-cutting technological advancements helped US firms to become more competitive in areas previously reserved solely by such large producers as BP and Exxon Mobil. Field works in Arctic lands and waters make OPEC and non-OPEC signatory parties of the output cut deal more nervous about their market shares in the futures. Despite growing opposition from numerous environmental groups and President Obama’s 2016 ban on drilling in Artic waters, exploration in Alaska managed to reveal massive volumes of oil. The following wave of Artic development might influence the oil prices in the long-term future.
Political tensions in the Middle East (airstrikes in Syria), unplanned outages in Libya resulting in the shutdown of the Sharara oil field contributed to the recent uplift in oil prices. The possibility of extension of output cut deal was an additional tailwind for crude oil futures in the past two weeks.
Next month, OPEC countries and their allies will gather together to decide whether to extend an agreement curbing oil production or not. It will be a difficult decision to make as the signatory parties are facing a lose-lose situation. If they fail to agree on the deal extension, the oil market will be oversupplied and oil prices tumble. If they manage to strike a deal, prices will likely hit higher levels offering the US oil producing industry a scope for further expansion.
So, without the cut deal, the bull market is poised to fade away, with Libya reopening its oil field after outages, geopolitical tension easing and flourishing oil industry in the US.
The wave of ups and downs in the Forex market did not bypass the exotic currencies in 2018. Let’s look at how analysts predict the performance of those ones, which suffered the most during 2018 - the Brazilian real and Turkish lira.
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