Oil prices continued their downtrend during Wednesday’s Asian session, trading near seven-month lows with trader confidence waning in OPEC’s extended oil cut and its ability to bring stability to oil prices. “Unless we see a marked reduction in crude stockpiles, the possibility of further short term falls in the price of oil cannot be ruled out,” commented Fawad Razaqzada, a market analyst at Forex broker Forex.com. Despite approximately 106 percent compliance with OPEC’s production cut guidelines, an increase in production in the months leading up to the production cut increased global supply which has kept pressure on prices.
Oil slid 2 percent on Tuesday on reports that global supply is increasing despite OPEC’s best efforts to curb production. According to the American Petroleum Institute’s data release on Tuesday, U.S. crude stockpiles fell more than forecast last week while gasoline and distillate inventories rose. Later today a government report will provide the official figures which often diverge from the API’s data. Tuesday’s price drop brought U.S. crude oil prices down 20 percent from recent highs, sending a red flat to technical oil traders.
Price Snapshots
U.S. WTI futures were down to $43.48 per barrel as of 6:08 a.m. GMT and Brent crude futures were down to $45.94, a 0.17 percent decline.
The U.S. dollar benefitted from the struggling oil prices on Wednesday, with the dollar index hitting a peak on Tuesday night and trading at 97.746 .DXY on Wednesday.
The pound struggled on Wednesday after Bank of England Governor Mark Carney shot down rumors of upcoming interest rate hikes, claiming that he wanted to see how Brexit proceeds before committing.