I am not sure if you have been watching, but the price of oil, gold futures and platinum futures are on the decline, according to Bloomberg Markets.
When oil prices drop below that $50 per barrel mark, I have noticed that folks start getting heartburn and start to worry if prices are going down the drain…
Although other commodity prices are declining, let’s focus on the price of oil and breakdown the important information concerning the same:
According to an article in Bloomberg this morning entitled, Oil Falls Sixth as U.S. Rig Count Gain Seen Boosting Output, “[o]il retreated below $50 a barrel amid concern that rising U.S. crude output will offset efforts of the Organization of Petroleum Exporting Countries to trim a global glut.”
As I write this article, Bloomberg Energy is reporting the prices of oil as follows: WTI Crude at $49.20 per barrel (a 0.85% change) and Brent Crude is at $51.58 (a 0.73%) change.
The Bloomberg article states, “[o]il fell a sixth day as the ramp-up of U.S. drilling signaled further production gains in the world’s biggest crude-consuming nation.”
On the issue of a ramp up in the United States, the Baker Hughes Rig Count as of Friday, April 21, 2017 was 857, an increase of 10 rigs from April 13, 2017 and a whooping 426 increase in rigs since the same time last year.
On Friday, Reuters published an article entitled, OPEC Panel Recommends Six-Month Extension of Oil Output Cuts: Source, that discusses the issue of extending the OPEC production cut deal.
By way of a reminder, the OPEC production cut deal was originally agreed upon to cut production by 1.8 million barrels per day from January 1, 2017 for a period of 6 months. It is now coming to a close so folks are discussing whether the production cut deal should be extended.
According to the article in Reuters, “[o]verall compliance with pledged cutbacks stood at 89 percent in March, a source said” and that the recommendation is that “producers extend a global deal to cut oil supplies for another six months from June.”
Several, including the folks at CNBC, according to a recent article this afternoon, are stating that one of the causes of today’s decline in oil prices is a “lack of confirmation that OPEC will extend output cuts until the end of 2017 and as Russia indicated in can lift output if the deal on curbs lapses.” Uncertainty is never good for oil prices.
We will keep you posted as we continue to monitor where prices are headed – we all have our fingers crossed that they are not going down the drain…
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