Oil prices slipped, on Wednesday, after the American Petroleum Institute (API), the largest U.S trade association for gas and oil, published that oil inventories increased by 2.3 million barrels in Cushing, Oklahoma.
West Texas Intermediate (WTI), the most prominent U.S benchmark for crude oil, fell by 58 cents to $50.28 a barrel for September deliveries. Brent North Crude for September, the benchmark for European, African and Middle Eastern crude oil prices, fell 35 cents and was trading in London at $56.69 a barrel at mid-day.
Oil spot prices in July last year were close to $105 per barrel, and prices have fallen more than 10 per cent this month alone.
Crude oil prices have fallen in the last year because of protracted over-supply and weak demand, which is being exacerbated by the Greek crisis and the Chinese stock market fall as well as an expectation that the U. S will raise interest rates this year.
Excess supply is expected to persist with the Iran nuclear deal, which will bring Iran’s oil onto the market in a few months. The Oil Producing and Exporting Countries (OPEC), the cartel of oil producing nations that includes Iran but is led by rival Saudi Arabia, announced that it would not cut back on output. The group said that the oil price dip was likely to be temporary and that demand was likely to pick up.
OPEC’s oil output faces challenges and competition from other energy sources, including U.S shale, as well as internal differences in opinion, with Iran and other smaller oil producing members requesting a cut back in supply in light of falling prices.
The next time OPEC will meet is in December.
(With input from agencies)
