After what it seemed to be a bullish outlook for the direction of crude oil prices, a decline in the oil prices was led on recently by reports than Iran increased their oil exports in the middle of a deal to cut global production between OPEC members. Other reports also showed that there was an increase in the activity of U.S. drillers for the tenth week in a row.
The deal between OPEC producers to cut at least 1.2 million barrels per day. A separate deal was also agreed upon by eleven non-OPEC countries to cut about 558,000 barrels a day. Although the OPEC agreement included an exception for Iran to raise the country’s oil produce, the brent oil closed lower on Monday with the light, sweet crude futures for delivery on the New York Mercantile Exchange trading lower by 0.6% at $53.70 down by 25 cents.
Meanwhile, the London’s ICE Futures March brent crude dropped lower at 0.5% down by 27 cents at $56.91 per barrel. The U.S. West Texas Intermediate (WTI) traded down by 29 cents at $53.70 per barrel.
Aside from the increase in the export numbers of oil exports from Iran, there was also reports from some U.S. energy companies reportedly adding oil rigs for the tenth consecutive week as
The decline in the oil prices follows from a recent two-week low that ended due to heightened investor confidence that the OPEC oil production cut is already underway while the decline that lasted at least two weeks was led on by the stronger US Dollar.
From an 18-month high record that oil futures have hit due to the OPEC deal, the greenback recorded its highest level since 2002 just last week. Oil prices then recovered back to a much more stable level after a show of investor confidence on the OPEC deal to cut oil production and eventually stabilize oil prices.
Direction of Oil Prices
Crude futures in the US West Texas Intermediate rallied to $52.42 up by 9 cents last week while the Global benchmark Brent crude futures rallied up by ten cents to $55.57 per barrel. Now both have rallied up by around 27 to 29 cents.
The outlook for oil prices remain high despite the recent decline as analysts holds their forecast for a rally that could reach to up to $59 this current quarter of the year with most markets looking forward to the positive effects of the OPEC deal including the possibility of much more stable price levels and filling back the producer’s cash reserves particularly countries like Saudi Arabia.
The US dollar’s rally is also posing a threat to the recent rallies that oil prices have gained over the past couple of weeks following the OPEC deal although oil prices have touched an 18-month high as initial US inventory data showed lower numbers.
Data from US energy companies also showed that they are still recovering despite a normal drilling activity to which they could still profit from. Should US drillers increase production