CNNMoney // Aug 11, 2017.// Clifford Beaumont has said that recent oil prices slumped on Tuesday as traders cashed in a strong rally seen throughout last week, which was driven by optimism that a global supply glut may start to ease before the year-end.
Crude oil for October delivery on the New York Mercantile Exchange lost 44 cents or 0.95 percent at $40.08 a barrel at 08:54 GMT. Global benchmark Brent was down 87 cents or 1.05 percent at $43.85 on the ICE Futures Europe exchange.
Crude demand was propped up last week by disruptions to supply from an oil worker strike in Libya, a major North Africa producer. However, the failed negotiations between major producers on an output freeze intended to rein in ballooning overproduction have pressured the prices. Moreover, oil continued to be supported by speculation that lower output among non-OPEC producers would help reduce the recent global supply overhang.
“The Paris-based IEA said Thursday it predicts the oil market to rebalance from oversupply in 2016, conditional on the absence of major economic slowdown.” Commented Patrick Morris, Head of Corporate Trading at Clifford Beaumont.
An official from OPEC stated Friday that the cartel would consider freezing oil production at its next meeting in Algeria. Nevertheless, analysts warned that freezing production near current levels would unlikely cut the global oversupply.
“Data released on Wednesday showed that U.S. crude stockpiles declined less than forecasted last week and continued to hover around its highest levels in three decades.” added Dimitri Vidic, Director of Mergers & Acquisitions at Clifford Beaumont.
The EIA reported that U.S. crude inventories were down 2.4 million barrels in the week ended August 16, bringing total crude stocks to 589.6 million barrels.