Due to the rise in the commercial stocks of oil in the USA and the increase in oil production in Saudi Arabia to the record highs, the price of oil continues to decline today. October futures for crude oil Brent at the ICE Futures fell by 0.23%, to 44.00 USD per barrel.
Energy information administration of the US Department of energy said on Wednesday that during the week of July 30–August 5, oil reserves in the U.S. have increased by 1.055 million barrels. This means that oil reserves in the country have reached 523.6 million barrels, which is by 37.7% higher than the five-year average values for this time of year.
Oversupply of oil in the world and the US markets is increasing. According to the monthly OPEC report, oil production in Saudi Arabia in July has grown up to the record highs of 10.67 million barrels per day.
Minister of energy of Qatar, Mohammed bin Saleh Al-Garden said on Monday that OPEC may hold an informal meeting on September 26-28 at the international energy forum in Algeria. However, negotiations may not lead to any agreement to limit oil production, and OPEC members will continue to protect their market share.
Oil production rate in the world remains high. According to the forecast by the U.S. Department of Energy (EIA), released on Tuesday, the USA will produce 8.73 million barrels of oil a day in 2016. Earlier it was expected that the level of oil production this year will be 8.61 million barrels a day.
The rise in oil prices since the beginning of the year, has provoked the increase in the number of operating drilling rigs in the United States. According to oilfield service company “Baker Hughes Inc.”, this figure has been growing for six consecutive weeks. Up to date, the number of rigs is 381.
Oil prices remain under pressure due expectations of the interest rate increase in the United States by the end of this year, which will lead to the strengthening of the USD.
Market is concerned that prices may reach $35 per barrel in the next few months. Fundamental factors are also favorable for the decline in oil prices.