Oil prices fell for a second day due to increased US production, pushing Brent crude down below $69 a barrel for the first time in six days. Brent crude futures fell by 0.7% to $68.97 a barrel, while US WTI crude futures fell by 1.1% to $64.86 a barrel. Despite this decline, prices remain heading towards achieving their fifth consecutive monthly gains.
US production has jumped by more than 17% since mid-2016 and is expected to exceed 10 million bpd soon. The USD’s drop over six consecutive weeks fueled the recent surge in oil prices. The US currency has fallen by 3% since the beginning of this month. Oil is denominated in dollars, and therefore, the dollar’s decline may boost demand for crude from buyers using other currencies.
Ship & Bunker reported Saudi Arabia’s that it had painted a bright and realistic future for the crude oil market, based on the assurances of the Minister of Energy, Industry and Mineral Resources Khalid Al-Falih during his participation in the Davos World Economic Forum. Recently, US shale production is overpriced, and the market is close to restoring full balance.
The international report on shipping and oil inventories has convinced a number of experienced international analysts that the vast gains made by oil prices in the first few weeks of the year mean that the market is on the way to major radical corrections, which will be happen very soon. The report highlighted the need not to be alarmed by the surge in US supplies and the assertion that demand growth will be more rapid, eliminating fears of a resurgence of supplies, especially in view of the current efforts of OPEC and independents to restrict production.
Saudi Arabia will maintain oil prices at current high levels, as this will benefit its plans for development and economic diversification, as well as boost the potential offering of Aramco’s share in the financial markets. The report pointed out that traditional producers in the Middle East will hold their position on the global energy map, and projects will proceed despite the uncertainty about developments in crude oil prices and the continued inequality between supply and demand. It also noted that there are good concrete efforts to make operational improvements and strengthen relationships between suppliers and customers.
According to the report, the Middle East is a great global power in the oil and gas sector, but it cannot be denied that it was negatively affected by the period of decline in crude oil prices, noting that the region’s reserves and production capacity is still strong and influential.
It was also explained that attempts to question the feasibility of projects and investments in the region have not been accepted and have not succeeded in diverting the interest of international oil and energy companies from investment and partnership with national companies in the Middle East, pointing out that in contrast to the expected a case of heavy investments in the region in recent years Downstream Projects.
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