Oil dropped and sold below $50 per barrel, lingering the drop that made waves last week after OPEC let down investors with its extension of production cut deal.
Following the drop that arose from OPEC’s agreement to extend the product cut by nine months, prices closed 1.1 percent less than what it was last week. A statement by Khalid Al-Falih, the Energy Minister in Saudi Arabia, the plan is working, and stockpiles globally will drop quicker in the third quarter.
Baker Hughes Inc. said that the explorers in the U.S included two rigs to 722 in the past week, and this remains the highest recorded since April 2015.
In a phone conversation with a commodities analyst, Hong Sung Ki at Samsung Futures, Inc. it was made known that prices are likely to rebound because oil production may tighten starting from the third quarter. He pointed out that the major issue is the scenario that will arise after the agreement to extend cuts by nine months. There is no possible exit plan, and U.S producers will increase output perhaps till the second part of this year.
While Russia and Saudi Arabia moved to support the deal at a meeting held in Vienna, Oil in New York got back from its fall towards $45. Although U.S inventories crashed down seven weeks at a stretch, they still stand above the five-year average, and production has been at its peak since August 2015.
July delivery at West Texas Intermediate traded at 449.67 per barrel on the Mercantile Exchange for Ney York. In Singapore, at 2:03 p.m, it went 13 cents down, and a total sale of about 15 percent less than the 100-day average was recorded. On Friday, prices went high to close at $49.80.
Judging by ICE Futures Europe Exchange, Brent for July was at $52.05 going down by 10 cents. On Friday, the deal settled at $52.15 on Friday as it gained 1.3 percent. The global standard crude sold at $2.36 to WTI.
According to reports by Baker Hughes, rigs aiming at crude rose for a 19th week in the highest duration of gains from August 2011. The number of functional rigs has increased from 316, although it the rate of growth was smallest this year. An additional four rigs to make a total of 27 oil rigs in the D-J/Niobrara Basin in Colorado was included, all thanks to the drillers for the growth last week.