Oil prices dropped Thursday. The U.S. West Texas Intermediate (WTI) crude oil futures fell more than 3 percent in early trading, ending up below $44 a barrel, the lowest price since Nov 14. It fell 4 percent on Thursday. The drop is the result of continued concerns of oversupply and persistent production glut despite previous assurances from Saudi Arabia that OPEC together with russia will get supply under control.
In agreement made last year, OPEC, Russia and other producers announced goals to curb production by 1.8 million barrels per day (bpd) for six months from Jan. 1. Since then, oil prices have rebounded but stockpiles remain high and production levels have not been cut. Some countries, including the USA, actually increased production levels.
Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas said according to CNBC, “There is an obvious compelling fundamental reason to extend cuts given the inventory objective–these are simply not declining fast enough (as acknowledged by Saudi Arabia and other producers) even if we were to account for seasonal factors that limit crude oil demand like refinery maintenance."
"Despite a possible extension of the OPEC agreement… prices are likely to continue their slide in Q2 and I see higher chances of them dropping below $45 than rising above $55," said Eugen Weinberg, head of commodities research at Commerzbank.