Post by : Mariam
Al-Faris
Photo: Reuters
Oil prices dropped after signs that Saudi Arabia wants to increase oil production again, raising worries that there could be too much crude oil available this year.
West Texas Intermediate oil fell by 0.9% and ended below $63 a barrel. This came after a Bloomberg report said Saudi Arabia, the main leader of OPEC, is willing to add more oil output to gain a larger share of the market. The country wants OPEC to increase production by at least 411,000 barrels a day in August and possibly September, as soon as possible, to meet the high summer demand, according to sources.
Even though the market reacted quickly to the news, experts say Saudi Arabia’s plan was expected. Rebecca Babin, an energy trader at CIBC Private Wealth Group, said this shows that OPEC’s current approach will probably continue.
This news shook up the oil market, which had been quiet due to mixed demand signals. In the US, crude oil stockpiles dropped by 4.3 million barrels last week, suggesting a tighter supply soon. But at the same time, gasoline demand went down.
At the start of the week, oil prices went up after OPEC+ announced a production increase in July, which was expected. Saudi Arabia led the production rise last month as OPEC started adding more supply faster, according to a Bloomberg survey. Still, the increase was less than what Saudi Arabia could have added based on their agreements.
Meanwhile, Saudi Aramco lowered its oil prices for Asia after OPEC+ continued to increase output for the third month in a row. This price cut was smaller than the 35 cents per barrel drop that many refiners and traders had expected.
Oil prices are down about 12% so far this year because of fears that too much supply will flood the market. Traders are also watching US-China trade talks closely, as President Donald Trump said the Chinese leader is very tough to negotiate with.
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