Oil Prices drop again as inventories pile up and production remains strong
Crude oil prices ended the week lower after reports of high inventories and strong production from the North American region emerged. The International Energy Agency (IEA) report indicated that the recent jump in the crude prices may not sustain as the production is higher than demand. Paris-based IEA expects the oil prices to touch another multi-year low in coming weeks.
IEA report further warned that lower oil prices could lead to social disruption in few countries which heavily depend on crude oil revenue. The lower crude prices have reduced the energy bills for most of the consumers and airline companies.
OPEC recently announced that the production will not be cut even as the oil prices remained under pressure. Crude oil production in the non-OPEC regions increased by 270,000 barrels per day in February to touch 57.3 million barrels per day.
The IEA report said, “Behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course.” The storage capacity in the U.S. is close to its limit. The reserve has 691 million barrels with additional space of just 36 million barrels. Despite the drop in number of rigs operating in the U.S., the oil production has remained firm.
Crude oil in New York closed $2.2 lower on Friday at $44.84 per barrel. Oil prices are expected to remain low for the current year.
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