Crude oil prices have continued to fall today, on reports of bursting inventories in the US and Asia and record-high production at OPEC.
Brent crude futures were trading at $48.98 per barrel today, a 1.8% increase, while WTI crude futures were trading at $46.74, after a 2.8% downfall on Wednesday.
According to analysts, these prices falls are ending a short rally that has pushed crude up by more than 20% following hopes that oil producers might freeze production to rein in oversupply.
Crude Oil Prices Continue to Go Down
However, hopes of this actually happening have been dampened by reports of record output at the Organisation of Petroleum Exporting Countries (OPEC) and the organisation’s track record in cutting down output.
As well as this, Iraq already said it is currently not producing at the level it could and is refusing to cap its crude oil output, raising concerns that OPEC supply will continue to rise.
Iran has been fairly elusive regarding its stance and has not said openly whether it will support or reject a crude production freeze deal, while Saudi Arabia and Russia have manifested their willingness to implement such a freeze.
Analysts believe that the high levels of production, the high storage levels and the demand outlook mean the end of glut is nowhere close to happening.
Iran Could Take Joint Action with OPEC
In the meantime, Iran and Ecuador are discussing ways to strengthen oil prices.
This follows Iran’s recent effort to integrate joint action, which has slightly raised hopes of the feasibility of a production freeze.
Iran has been increasing its production since Western sanctions were eased in the beginning of the year and refused to join a previous attempt by OPEC plus non-members to stabilise production.
Also this week, the Russian Economy Ministry said in a statement that it expects crude oil prices to remain stable at their current levels over the next two years, with a sustainable improvement by the end of 2017.
According to the ministry, the latest price rally was “speculative” and should not last for a long time.