U.S. oil prices wavered early today as investors continued to wrestle with rising crude supplies against lingering questions about demand.
Global benchmark Brent crude is now down about 24% from its peak in October, with January Brent last up 83 cents, or 1.3%, at $66.30 a barrel. The contract tumbled $4.65, or 6.6%, to settle at $65.47 a barrel on ICE Futures Europe Tuesday.
West Texas Intermediate oil for December delivery rose 23 cents, or 0.4%, at $55.91 a barrel, after settling Tuesday at $55.69 on the New York Mercantile Exchange. That was the lowest front-month contract finish since Nov. 16, 2017, and biggest one-day percentage decline, at over 7%, in more than three years, according to Dow Jones Market Data, MarketWatch reported.
The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, speaking with Vestnik Kavkaza, noted that the main reason for such a decline in oil price was growth in U.S. crude oil production. "Oil price depends on the balance of supply and demand. If oil price declines, then either supply exceeds demand or demand begins to decline. The United States is the main consumer of oil, out of 4 billion tons of oil per year they consume 913 million tons. At present, their reserves at the refineries have increased, due to which the current situation is nothing more than seasonal fluctuations in oil prices," he explained.
"Also, the decline in prices down is provided by market speculations, hence a decrease in quotations by $4 per barrel at once. A similar decrease could be provoked by a collapse of some country's economy. I am convinced that by the end of the year Brent will reach $72 per barrel. Now all Iran's contracts concluded before the sanctions will be fulfilled, but then winter will come and the demand for oil and petroleum products will rise. In addition, the U.S. has increased oil consumption over the year, but has not increased oil production, and when current reserves at the refinery come to an end, prices will increase," Valery Bessel predicts.
