Back in 2012, the price of a barrel of Brent Crude was over $120 ($127 in March 2012) and had been higher before the Global Financial Crisis really bit. 2014 saw the price collapse from $107 at the start of the year to a low of just under $29 in January 2016. The price recovered somewhat over the course of 2016 to just under $57 by the end of the year. The recovery was due to a putative agreement between members of the Opec cartel and other major producers to restrict global output, reducing the glut of oil on the world’s markets. However, it was always an open question as to how well the decision would hold up.
This year has seen the oil price hold fairly stable above the $50 mark, but in recent days, it has fallen below this mark and is currently trading at $48.8 (slipping from $55.4 over the course of the week), a six month low. Opec and other producers are due to meet towards the end of May to consider extending their reduced production agreement which was set up in November. Whilst they could agree to extend or deepen the agreement, analysts see mixed signals from (non-Opec) Russian over its intentions.
US oil production is increasing and the drawdown on the US crude stock came in at 930000 barrels less than half of the 2.3 million barrel reduction that had been anticipated, a factor which may soften demand.