Published: Mon, February 15, 2016
Business | By Max Garcia

Oil prices in United States crash below $27 a barrel

While countries like Saudi Arabia, Iraq and Iran can cope with global price of oil around $30-$50 per barrel, the same cannot be said for countries whose economies largely depend on oil.

The International Energy Agency has predicted that "unless something changes, the oil market could drown in over-supply" in 2016. U.S. West Texas Intermediate (WTI) futures were trading at $27.57 per barrel, up 5.19 percent or $1.36 from the previous day's settlement after hitting lows not seen since 2003 in the previous session.

To this end, it is the view of many in the market that lower oil prices (which had the knock-on effect of lowering petroleum product prices, thus leading to an uptick in consumption in 2015) has been finally played out. Investors are also nervously awaiting the release later in the day of a report on United States stockpiles that is forecast to show a further increase in inventories.

Oil's early rally was partly inspired by talk that Iran was ready to negotiate with Saudi Arabia on price support. The 1.26 million barrels surge - essentially in line with analysts' projections for 1 million barrels increase in supply level - took gasoline stockpiles up to 255.66 million barrels - a record high.

United States oil prices fell for the fifth straight session on Wednesday (Feb 10) as USA crude inventories remained at high levels and OPEC confirmed a significant rise in cartel production in January.

"There's a price fight within OPEC for Asian market share, and there are worries that storage capacity is going to be breached", said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.

Much like its United States counterpart, Brent futures have extended sharp declines from last year, by crashing an additional 18% over the first six weeks of the new year. Most traders were skeptical, noting that Venezuela and Russia recently called in vain for Opec and other major oil producers to cut output, Reuters reported.

almost $108.


After the price for the main worldwide oil contract struck a low below $28 last month, it rebounded to above $35 and now sits around $33.

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