Brent crude slipped below $45 on Wednesday, reaching its lowest price since last November as a supply glut continues to plague oil markets, according to a new report by Bloomberg.
"There's a sea of negativity," Maxwell Gold of ETF Securities LLC said. "This is much more a story of sentiment weighing on the markets."
The U.S. Energy Information Administration reported a 2.5 million barrel draw on domestic inventories on Wednesday, but the news was not enough to boost West Texas Intermediate (WTI) prices, which have fallen 22 percent from a peak in January.
"I don't think one report by itself is enough to dispel the fears," Gene McGillian, manager for market research at Tradition Energy, said. "I would be surprised if this is the beginning of a turnaround."
At the end of last month, Saudi Arabia announced a plan to lower exports to the U.S. to force American refineries to use the millions of barrels of crude in storage. A few days later, Bloomberg reported that Iraq had negated its ally's export cut by offering its own crude as a substitute for Saudi supplies.
Reuters reported today that OPEC-member Nigeria is set to increase exports to 2 million barrels per day in August. The African nation is exempt from the terms of the bloc's deal to cut output by 1.2 million barrels per day through March 2018. Loading plans compiled by Reuters show 2.02 million bpd of shipments planned on 67 vessels, some of which had previously been scheduled for July, but had to be pushed back due to loading delays.
Libyan oil production is also on the rise, with the country today announcing that output had reached 900,000 barrels per day. By next month, that figure will touch 1 million.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on… More