Oil prices down as OPEC fans oversupply fears
OIL prices resumed their downward spiral yesterday after Organisation of the Petroleum Exporting Countries (OPEC) sparked fresh worries about an oversupply crisis with a forecast that global output will increase next year.
The commodity rallied for most of August on hopes for a production limitation deal at a meeting between OPEC and Russia this month, but it has taken a beating in recent weeks as traders grow cynical that the Algiers gathering will end in success.
Adding to the pressure has been a pick-up in the dollar and signs that demand remains weak.
The OPEC on September 12 predicted non-member countries would see output rise in 2017, revising its previous expectations of a drop.
Yesterday, US benchmark West Texas Intermediate dipped 72 cents to US$45.57 and Brent fell 63 cents to $47.69.
Prices have seen wild swings this past week. On September 8 they surged more than $2 after data showed US stockpiles fell the most in 17 years.
However, those gains were erased the following day as analysts said the inventories decline was because of the suspension of imports and shutdown of some production owing to a severe hurricane in the Gulf of Mexico.
“Oil prices are under pressure on renewed oversupply concerns,” Bernard Aw, an analyst with IG Markets in Singapore, told AFP.
Forecasts that US stockpiles will show a rise when fresh data is released today would give “credence to OPEC’s prediction that output from non-OPEC producers will increase next year”, Mr Aw added.
Traders are keeping watch on the Federal Reserve with speculation rife that it could lift borrowing costs. Such a move would strengthen the dollar, which would make oil more expensive for holders of other currencies, damaging demand. –