US oil prices slump to a new a six-year lowDaniel McCarthy (Author) Published Date : Mar 17, 2015 15:57 ET
Concerns over excess supply of crude oil forced US oil price to delve to its lowest in six years, trading at $43.81 per barrel on the New York Mercantile Exchange.
This is similar to Brent crude prices which remain unstable, and traded at $53.97 on London's ICE futures exchange.
Analysts and commodity traders are predicting an enduring bearish run for oil prices as a result of surplus in oil stocks. With US oil inventories expected to increase in the future they claim, the prices will continue to be weak, prior to the period that supplies become stable. Production of shale oil in the three regions of Bakken, Eagle Ford and Niobrara are to be reduced.
In a recent report released by the Organization of Petroleum Exporting Countries on Monday, the organization said unstable productions in Iraq, Nigeria and Iran contributed to a slight fall in its output for the month of February. It also said cut-backs in the deployment of oil drilling rigs and reduction in spending may ensure that the current oil boom in the US does not survive the year.
Investors and analysts are not completely persuaded that the marginal reduction in production will immediately result in the strengthening of oil prices. They are also monitoring developments in the Iran nuclear talks with keen eyes.
The previous expectation that productions by non-OPEC countries will decline has not been greatly supported by the rising output in the US, nor has the excess supply resulted in increasing activities on the demand side of the market.
Nymex gasoline blendstock for the month of April, however, traded at $1.7256 per gallon, representing a drop of 17 points, while diesel went 27 points higher at $1.7013.
US oil prices slump to a new a six-year low