Crude oil shifted lower overnight, falling below $55 per barrel. The commodity is now clawing back some of those losses, after adding 0.12% to its value and inching back over $55 per barrel.
The bullish tones inspired by the Saudi Arabian anti-corruption purge has dwindled, leaving the international benchmark, Brent oil, to collapse below $62, trading now at $51.42 per barrel.
The bearish movements touched energy stocks, weighing them down as investors reassessed the fundamentals of the oil market. The IEA issued a report which predicted US oil production would reach record highs that could span as far as 2025. The forecast sent oil lower overnight, as the commodity lost over 1% of its value in the Asian trading session.
Oil has extended gains last week as the grip of over-supply woes loosened its hold on investor’s sentiment.
Today’s crude oil inventories could give oil prices a fresh direction. Forecasts suggest a decrease of 2.1 million barrels of US crude stockpiles over the last week.
There has been a grapple between which sentiment to follow: OPEC’s efforts to depress supply or the US oil drillers and defiant OPEC members who increase output.
US oil drillers have been more agile since the price of oil reached $50 per barrel. The price war’s plot has thickened since Trump openly advocated fracking, assuring oil investors that over-supply woes will soon be harder to ignore.
Meanwhile, Saudi Aramco is reeving up for its initial public offering in 2018. The world’s largest company, with an estimated worth of 2tn, will be privatised.
OPEC and allies will meet in Vienna to discuss its strategy for the oil industry, where the cartel will likely extend its supply cuts until the end of 2018.
Any disappointing results from this meeting could result in bearish tones for the oil industry.