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Oil prices dipped to a seven-month low last week following new reports from the U.S. government showed a lesser than expected weekly decline in domestic supply and production and a rise in overall crude production and gasoline stockpiles.

Seven-Month Low

Most crude oil prices lost around 4% last week.  Last week, the July West Texas Intermediate crude on the New York Mercantile Exchange sank by 3.7% or around $1.73 before closing at $44.73 per barrel which was the lowest market close since November 14 based on data from the Dow Jones Industrial Average.  

The WTI has lost almost 18% since hitting an all-time high of $54.45 in February.  The Brent LCoc1 also lost 3.5% settling at $47 per barrel which was its lowest close since November 29 a day prior to the OPEC output cut agreement. Analysts commented that the WTI’s next decline might be as low as $42.20 per barrel due to its performance in the past three weeks.

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The ICE Futures Europe exchange August Brent crude also lost around 3.5% settling at $47 per barrel which is also its lowest close since last November. On the Nymex, July gasoline edged 4.5% lower before settling at $1.433 a gallon whole July heating oil inched 2.6% to $1.410 per gallon also the contract’s lowest since November. July natural gas also lost 1% or 3.3 cents to $2.933 per million British thermal units.

By Friday, most of the markets have been convinced that OPEC’s efforts to stabilize oil prices and end a three-year oversupply has fallen into a negative side as rising crude supplies proved to be more aggressive than expected. Oil prices continued to slump during Monday trading after markets consolidated the performance of crude oil last week along with the sentiments regarding the rising oil production.

Overall, Brent crude prices have lost 13% and is expected to sink to the $47 level per barrel later this week and lower during the next of the year.

US Crude Stockpiles

Along with reports of OPEC supplies rising in May due to the increase in the output from Libya and Nigeria despite being exempted from the cut, data from the American Petroleum Institute and the U.S. Energy Information Administration showed that the decline in U.S. crude inventories was lower than expected.

For the week that ended last June 9, the U.S. EIA posted a drop of 1.7 million barrels in domestic crude supplies while the American Petroleum Institute stated that crude inventories have risen by 2.8 million barrels last week.

The EIA also stated that Gasoline stockpiles have risen by 2.1 million barrels while distillate stockpiles rose up by 300,000 barrels. Analysts predicted that the less than expected decline will offset the OPEC’s efforts in bringing crude oil prices up.

Goldman Sachs predicted that U.S. crude oil production might also rise by as much as 770,000 barrels per day during the last quarter of last year and this year.

The output from Libya also put down OPEC efforts further after it reported that it plans to extend production by 1 million barrels per day by the end of July.

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