US Exit From Paris Climate Deal Slashes Oil PricesFeatured, Latest News, News Saturday, June 3rd, 2017
BALTIMORE, MD (AFRICAN EXAMINER) – Following the US President Donald Trump’s decision to abandon a global climate pact, with the possibility of super power’s further crude drilling as well as persistent glut in global supply, oil prices Friday tumbled below $50.
The Global Benchmark Brent crude futures was down 1.7 percent, or 80 cents, at $49.75 a barrel, as at 0725 GMT.
Similarly, U.S. West Texas Intermediate crude CLc1 futures dropped 87 cents, or 1.81 percent, to $47.46 per barrel.
Mr. Trump has declared that US would withdraw from the landmark 2015 global agreement to fight climate change, a move that fulfilled a major campaign pledge but drew condemnation from her allies.
“This could lead to a drilling free-for-all in the U.S. and also see other signatories waver in their commitments,” said Jeffrey Halley, senior market analyst, OANDA.
“This outcome could increase the supply-side equation from the United States and complicate OPEC’s forward projections. A scenario that would not be favorable to oil prices” Halley added.
Surging US production has put a strain on OPEC members’ efforts to curb production to drain a global crude supply overhang.
A week ago, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC members met in Vienna to roll over an output cut deal to reduce 1.8 million barrels per day (bpd) until the end of next March.
Russian Deputy Prime Minister Arkady Dvorkovich said on Friday that he did not think that the global output cut agreement would be altered should prices go lower.
Russia’s Rosneft CEO Igor Sechin also said the market cannot stabilize unless all producers cut output.
Oil prices are down some 7.5 percent since OPEC’s May 25 decision to extend the cuts.
Faced with lingering glut woes, the oil cartel also discussed last week reducing output by a further 1 to 1.5 percent, and could revisit the proposal should inventories remain high, according to sources.
But oil markets were offered some support by official data that showed crude inventories in the US, the world’s top oil consumer, fell sharply last week as refining and exports surged to record highs.
Crude stockpiles were down by 6.4 million barrels in the week to May 26, beating analyst expectations for a decrease of 2.5 million barrels.
Despite this, US crude production rose to 9.34 million bpd last week, up nearly 500,000 bpd from a year ago/NAN.
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