Energy - - Mar 15,2017
Oil prices dropped on Tuesday after Saudi Arabia reported its output in February surged above 10 million barrels a day, wiping away about a third of the production trims the nation made in January.
Saudi Arabia, Opec’s biggest member, has experienced a significant output rise which has put further burden on the oil prices.
This output surge has erased the gains which were held after Opec issued output cuts late last year.
On Monday’s close, West Texas Intermediate for April delivery plunged by more than $1 US a barrel before improving some of its damages to close at $47.72 US. Whereas, the price of Brent crude settled close to 0.5% down at $51.09 per barrel.
In February, Saudi Arabia's production augmented to 10.011 million barrels per day. These figures are higher in comparison to 9.748 million barrels per day noted in the month of January.
Opec said in its report that despite the supply alteration, “stocks have continued to rise”. This is not mainly evident in the US, but in Europe as well.
On the other hand, Saudi Arabia’s energy minister offered a statement highlighting that the nation “is committed and determined to stabilize the global oil market” through merged efforts with all other contributing Opec and non-Opec producers.
Opec also said the crude inventories in developed countries increased above the past five-year average in January. This has happened despite the production cuts by some of the prime exporters from across the globe.
In December, the Opec members along with other major oil producers, including Russia, settled to a deal regarding trimming crude output in order to reduce oversupply and strengthen prices. The deal is active which focuses on eliminating about 1.8 million barrels from daily production and will sustain till the middle of the year.