Oil Prices Fall For Third Day In a Row
Oil prices fell for the third day in a row to under $48 a barrel yesterday as supplies continue to increase in the United States and demand growth gets slower in China.
This is the lowest that oil prices have been in three months. The inventory levels in the United States have reached their highest amounts in the last six years.
US crude oil fell 74 cents to $47.80, its lowest since the middle of February. This is a 20% decline from the $58.28 record high it reached in April. Brent crude dropped 53 cents to $47.81 a barrel. According to AP,
Brokers noted the recent strengthening of the dollar relative to other foreign currencies, which has made many commodities cheaper, including oil.
They also said that oil prices could slip further in the weeks ahead if speculators bail out of the market, but cautioned that too sharp a drop in prices might prompt a production cut from the Organization of Petroleum Exporting Countries.
“You can only bet so long that supplies are going to grow tight,” said Liberty Trading Group President James Cordier.
“When we were racing toward $60 a barrel, it was mostly speculative driven. Certain people were calling for $90 and $100 crude and the public was pouring money into commodity funds,” added Cordier. “As those positions lighten up, it could bring us to the $45 level… There’s still a little fluff in the market.”
US crude prices were as low $20 a barrel last time the country had inventories this large. They are not likely to get that low now because OPEC has ended nearly all spare production.