On March 18, concerns for rising global supply continued to push oil prices lower to a new six-year low.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in Aprilslumped $1.29, or 3%, to $42.17 a barrel, adding to a 1% loss from the previous trading session. Brent crude for May delivery on London’s ICE Futures exchange was down 59 cents, or 1.1%, to $52.92 a barrel, after dropping 0.8% on March 17.
Oil prices have been falling since mid-2014, but the decline stalled in February, raising expectations that prices had bottomed out. But oil started tumbling again in March on the back of surging US production.
While US oil inventories remain near record highs, aDrilling Productivity Reportfrom the US Energy Information Administration indicates rapidly falling rig counts will curb production in the Eagle Ford, Niobrara, and Bakken regions in April. The Permian shale basin, meanwhile, continues to see production gains.
A November decision from members of the Organization of Petroleum Exporting Countries (OPEC) to keep production static despite sliding oil prices was seen as an effort to sideline shale, where production is at times more expensive than in conventional oil reserves.
Meanwhile, the Russia Energy Ministry forecasts the country’s oil production to drop by 2% in five years, Kommersant reported on March 17. Russia’s oil production will experience decline by 11 million tonnes to 514 million tonnes by 2020, the paper said. However, it noted that Russia’s 2025 oil exports are projected to grow.
Low oil prices have caused revenue losses for the Russian economy, already under pressure fromWestern sanctions imposed against Russia inthe wake ofthe Ukraine crisis. On March 16, Russian Economy Minister Alexei Ulyukayev said he expected Western sanctions to remain in effect this year and the following year.
http://www.neurope.eu/article/oil-pumps-keep-working-prices-keep-dropping