In a surprising move, oil prices took a dip as rising US output weighs in on prices. Prices on Friday took a fall from their two – year highs, brought down by rising US output and expected January re-opening of Forties Pipeline in North Sea.
U.S. West Texas Intermediate (WTI) crude futures were at $58.15 a barrel at 0130 GMT, down 21 cents, or 0.4 percent, from their last settlement.
Brent crude futures, the international benchmark for oil prices, were at $64.64 a barrel, down 26 cents, or 0.3 percent.
The dip came as a result of investors’ offloading long positions after reports of an increase in international oil inventories hit the markets. American Petroleum Institute had earlier warned of a bearish 2018 for oil prices as global oil inventories continue to rise.
However, despite warnings from API, most analysts believe that might not be the case. Analysts and Investors expect that oil market will tighten in the year 2018 and support higher oil prices, but rising Shale production will cap any significant price gains.
According to a senior analyst, there are three potential triggers that could send the oil prices tumbling. These include a large correction in US Equities that prompts sell-off in commodities, one of the OPEC member or Russia breaking away from the unusually strong compliance to the cuts, and a rise in US oil production rising so much as to make OPEC see it as a threat to its long-term oil market share.