Published: Tue, May 09, 2017
Money | By Armando Alvarado

Oil prices fall further amid oversupply fears

Oil prices fall further amid oversupply fears

Analyst fear that a failure in the extension of OPEC oil cut deal will see oil run into $40 per barrel or worse, while the World Bank projects $55 per barrel, if the deal is extended.

Both benchmarks trimmed losses to trade near Thursday's close by 1320 GMT, after Saudi Arabia's OPEC Governor Adeeb Al-Aama told Reuters that OPEC and non-OPEC nations were close to agreeing a deal on supply cuts. Meanwhile, shale drillers are pressing ahead with their longest expansion since 2011. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals.

Michael Baxter, an economics commentator for The Share Centre, said: "The oil price has hovered in a corridor of between 57 USA dollars (£44.06) and 46 U.S. dollars (£35.56) for much of the last 12 months, but until recently it seemed as if the oil cycle was slowly turning upwards".

Crude oil lost ground on Thursday, falling for a third out of four sessions and trading near its lowest since late March after data showed a lower than expected decline in US inventories. The result has been 11 weeks of expansion in United States production in the longest run of gains since 2012. Prices are still more than 50% below their peak in 2014, when surging shale output triggered crude's biggest collapse in a generation and left rival producers such as Saudi Arabia scrambling to protect market share.

The oil market's May meltdown is getting worse.

Analysts had expected the cuts to prompt US shale producers to pump more crude, but the rebound in output has surpassed expectations.

Brent crude futures, the worldwide benchmark for oil prices, were at $47.05 per barrel at 0335 GMT, down $1.33 or 2.8 percent from their last close.

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The votes from India, were also perhaps, based on the same reservations that European countries had towards Le Pen. The FTSE 100 index of leading British shares bucked the trend, trading 0.1 percent higher at 7,307.

June WTI is down $1.29 to $44.23/bbl on Nymex at 1:28pm in Singapore; volume traded was more than 350% above 100-day average.

In London, BHP Billiton Ltd. fell 2.7% overnight Thursday and Rio Tinto fell 1.4%. Prices are down 9.1 percent this week, heading for a third weekly decline. US crude fell as low as $45.39, Brent touched $48.32.

Given the lack of any significant oil data releases on the day, we see two forces at play in this sell-off: (1) a follow through on the sharp declines in copper and iron ore the day before on concerns over growth in China, and (2) once again, the influence of technicals and positioning. That has added a bearish sentiment to the market, Lipow said.

The selloff on Thursday was also due to "broad macro concerns regarding the Chinese economy".

Investors are anxious that Opec nations will fail to rein in output further at their next meeting later this month.

Oil prices may be taking a cue from the US labor sector, which found total non-farm payrolls increase by 211,000 in April.

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