Oil update: Prices continue to fall despite OPEC extension

A run of US oil prices to cross the $50 price mark ran out of fuel as the oversupply continues to bring prices down. The earlier rise came in the wake of strong seasonal demand in the US for gasoline during summers as families and friends travel or go around vacations during these four months. The season usually kicks off with the Memorial Day holiday. The anticipation for the rise in demand boosted confidence in investors for a depletion of stockpiles in sync with rising demands.

The American Automobile Association (AAA), released the projected numbers stating that an average American will drive a total of 50 miles more than their usually trips during this summer. Despite, strong demand forecasts oil prices slipped downward after rising for a few days in anticipation of OPEC meeting. The traders said that the ongoing oversupply concerns are taking its toll on the oil prices. U.S. drillers have added rigs for 19 straight weeks, to reach a total of 722, highest since April 2015 and the longest run of increases ever.

The ongoing glut has also reflected in global markets, where benchmark Brent crude futures were at $52.09 per barrel, down 20 cents, or 0.4 percent, from their last close. The main factor for the oil prices will be dependent upon whether the excess supply oil is kept in check with the cuts.

Experts predict that the prices of oil will see a floor of $50 and will reach as high as $60 during fourth quarter of the current year. With OPEC cuts decreasing oil supply in the market by 1 and a half million barrels each day since last November, a total of 45 million barrels a month, will surely deplete the oil reserves by a good enough margin to bring the prices back. The cuts will drive the market towards a much lower inventory levels by the end of 2017.