As the storm continues to brew in the Gulf of Mexico, forcing producers to suspend activities and evacuate workers, crude oil prices continue to suffer.
Although Brent and WTI registered a slight increase, recent news have brought prices to a slump again, with rising doubts over a definite output cut by oil producers.
Meanwhile, traders are waiting on weekly data to be released by the US Energy Information Administration (EIA) later today, with prospects for crude stock to rise by approximately 1.2 million barrels.
Crude Oil Prices Hit by GOM Storm & Oversupply
Speculation that the meeting between members of the Organisation of Petroleum Exporting Countries (OPEC) in Algiers in late September could result in a cap on oil output had already caused a slight rise in prices.
However, recent news on OPEC’s next informal meeting has brought conflicting results.
While Iran continues to insist on plans to boost output, ramping up oversupply worries, Iraq just announced it is ready to support a freeze in oil production.
Iran’s oil minister Bijan Zangeneh had said that the country needed to raise oil production by 200,000 barrels a day by the end of 2016 to regain the market share lost during international sanctions.
Still, Iraqi Prime Minister’s announcement that it will support a freeze brought renewed hopes that a decision to cut output could actually happen in late September.
US Dollar and Falling Discoveries Affect Crude
Crude oil prices fell further in Asia today on the back of a stronger US dollar, after consecutive decreases caused by rising US inventories.
As well as this, new oil discoveries have reached a 70-year low, suggesting that a shortfall in oil is set to come.
At the same time, the US government suggests that global demand should rise by 2026, but stockpiles of crude and petroleum products around the world remain high, with US inventories reaching record highs.
Despite the lower prices, analysts envisage a tighter supply and demand balance by the end of 2016, media sources reported.